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Announced on the 7th of February 2019, the Competition and Markets Authority (CMA) has issued court action against Care UK after it refused to refund residents who had to pay an obligatory upfront fee.

In December 2018, the CMA told the care home provider that it must refund over 1,600 residents who were charged a mandatory upfront ‘administration’ fee of as much as £3,000 or else face legal action.

The CMA believes that Care UK was breaking consumer protection law by requiring a substantial non-refundable administration fee from residents for which they received no services or products in return. The Authority also believes that the company’s description of the charge, and what it was for, was misleading and that residents were told about the fee too late in the admission process.

Whilst Care UK has stopped charging this fee following CMA intervention, it has refused to refund any residents. Consequently, the CMA has issued court action against the care home provider and is now seeking a court order to secure refunds for those affected.

However, only the court gets the final decision on whether any conduct breaches consumer protection law.

The CMA will argue that in charging these administration fees, Care UK used contract terms and practices that were unfair and contrary to consumer protection law. The CMA will also argue that Care UK should be prevented from charging these – or similar fees – in the future.

The care sector has already seen changes as a result of CMA investigations, including residents receiving £2 million in compensation from a major UK care home provider for paying upfront compulsory fees and Care UK reducing the length of time for which it charges fees after a resident’s death.

In November 2018, the CMA issued comprehensive advice to care homes to help them understand their responsibilities under consumer protection law, as well as an open letter urging them to review their practices in light of the guidance immediately.

Care homes have been told to ensure that their contract terms and business practices follow this advice.

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