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Care home providers get new guidance from the CMA on terms of service

The Competition and Markets Authority (CMA) has issued guidance for care home providers to assist with compliance under both the Consumer Protection from Unfair Trading Regulations 2008 and the Consumer Rights Act 2015.

The previous guidance, issued by the Office of Fair Trading back in 2003, was withdrawn at the start of June 2017 as it no longer reflected the current legal position given various legal changes in the last 14 years. The CMA subsequently launched a consultation on its draft advice following on from a market-wide study in 2016.

What does the guidance cover?

The new guidance sees the culmination of 2 years’ worth of research and focuses on four main areas aimed at residential and nursing care home providers for people over 65:

  • Providing upfront information to prospective residents including key information at first contact and, importantly, additional information when wanted or needed. A non-exhaustive list is given within the guidance and includes the type of care needs provided for, whether residents can be state-funded or self-funded and any optional or upfront payments required;
  • Treating residents fairly. This is focused on the terms within contracts, the transparency of fees and actions during a residents tenancy;
  • Providing a quality care home service with reasonable care and skill. Examples of conduct which may fall foul of this include failing to discuss with a resident or their representative changes to their care, treatment and support and not taking into account a residents personal preferences in areas such as food and religion; and
  • Ensuring that providers’ complaints handling procedures are easy to find, easy to use and fair.

The result of failure to comply

While it appears a small period of grace will be given to care home providers to make changes in the wake of this guidance, the CMA has already taken action against one provider for the upfront fees it charges prospective residents. The case in question could see total refunds given to residents of over £4million and a court case to force a change in business practices. In light of this, the CMA guidance also indicates the following potential consequences should providers fail to comply:

  • Court action by the CMA or other relevant bodies to force a change in business practices or standard contract terms;
  • A requirement to compensate affected parties, including a refund of fees; and
  • Criminal prosecutions should the breach be sufficiently serious.

The residents themselves may also have a recourse for court action to claim damages.

Follow up by the CMA

The CMA has also confirmed that a compliance review will be carried out from November 2019. This will assess information received, and may involve information being requested, from care home providers regarding their compliance, or lack of, with consumer law. Should any serious breaches be found, the CMA will take action in line with that mentioned earlier in this update. The compliance review will also take into account the progress made by the individual provider since the publication of the CMA’s advice when considering the appropriate course of action.

Next steps for care home providers

Care home providers should ensure they read all of the advice issued. This has been broken down into several documents for ease of digestion and is available here. A review of all contracts and business practices should then be undertaken, checking for any potential points of conflict and amendments should then be made to bring them in line with the latest guidance. It is also imperative to ensure that frontline staff are given training to understand the changes and the requirements for compliance as they will have a significant impact on a care home provider’s ability to comply.


This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2022.


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