Care homes briefing 183 – Competitions and Markets Authority advice on charging fees after death

On 31 May 2018 the Competition and Markets Authority (CMA) published guidance on the charging of fees after a resident’s death and the treatment of their possessions. A public consultation was held by the CMA earlier this year following concerns about excessive fees being charged following the death of a resident.

The CMA is the UK’s primary competition and consumer authority and the guidance aims to help care homes understand and comply with their responsibilities under consumer law.

There is particular reference to the Consumer Rights Act 2015 (CRA) in relation to unfair contract terms and the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) in relation to unfair business practices.

The guidance states that the expectation is that all care homes will review ‘as soon as possible’ and where necessary ‘change their contract terms and practices or risk enforcement action’.

Fair contract terms

There are two approaches that the CMA has said that it is unlikely to object to as unfair contract terms:

  1. Limiting the charges for a short and fixed period of up to 3 days (from the day following death) and putting  measures in place to stop the charges if the room is let to another resident within the period.
  2. Limiting the charges to a reasonable backstop period of no more than 10 days (starting on the day after the resident’s death) when possessions are left in a deceased resident’s room.

Considerations

  • Care homes could also include terms which permit a representative, after the death of a resident, to request in writing an extension of the fixed period or backstop period, respectively.
  • Charges for removing a resident’s possessions. The charges for storing and disposal should be clearly set out and any fees which will be charged in any extension period agreed must be clear. Any refund should be made promptly and in any event within 28 days.
  • Any charges must be reflective of reasonable costs incurred. If there is to be disposal or sale of a resident’s possessions (uncollected) this must be clearly provided for in the contract and if sale follows there is an obligation to obtain a reasonable price and a return of sums recovered (minus expenses) must be returned to the resident’s representative.

Special cases

  1. Top up fees – fees payable after death must be in accordance with the same payment period as the local authority pays. (The recommendation is that this should be for up to 3 days from the day following the resident’s death).
  2. If there is a shortfall in Funded Nursing Care payments, there cannot be any charge.
  3. There cannot be a charge for any shortfall in local authority funding. This will be settled directly between the care home and the local authority.

Risks

In addition to enforcement action by the CMA or the regulatory body, the consumer may also take action and be entitled to an award of damages to compensate for losses caused by a breach of consumer protections.

It is, however, the potential damage to reputation that is likely to be the most serious consideration for most  providers and given the spotlight which has been focused on fees in recent months.


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.

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