Summary: The fee increase clause in the Care Provider’s contract was not in line with guidance from the Competition and Markets Authority and this caused uncertainty. The Care Provider will review and amend its contract.

The complaint

1. Mr X complained about St Matthews Ltd (the Care Provider). He said the increase in fees in October 2019 was not in line with national guidance and was potentially unfair. He said this caused a financial loss to his relative Mrs Y who is in one of the Care Provider’s care homes and uncertainty about future fee increases. He wants the Care Provider to refund the increase.

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The Ombudsman’s role and powers

2. We investigate complaints about adult social care providers and decide whether their actions have caused an injustice, or could have caused injustice, to the person making the complaint. I have used the term fault to describe such actions. (Local Government Act 1974, sections 34B and 34C)
3. If an adult social care provider’s actions have caused an injustice, we may recommend action to remedy injustice caused to the person affected and to prevent similar injustice being caused in the future. (Local Government Act 1974, section 34H(4))
4. We cannot investigate late complaints unless we decide there are good reasons. Late complaints are when someone takes more than 12 months to complain to us about something a care provider has done. (Local Government Act 1974, sections 26B and 34D, as amended) I have exercised discretion to investigate Mr X’s complaint although it concerns a fee increase that took place in October 2019 that he was aware of at the time and did not complain to us until May 2021. This is because we do not enforce the time bar rigidly. I have taken into account that:
• Mr X was unaware that the contract might be flawed until he read one of our published decision which was not issued until January 2021 and he complained to us within a reasonable timeframe after seeing that decision
• There may be a wider injustice to all those who have signed the same contract as Mr X.
5. If we are satisfied with a care provider’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

6. I considered Mr X’s complaint to us, the Care Provider’s response to his complaint and documents described in the next section of this statement. I discussed the complaint with Mr X.
7. Mr X and the Care Provider had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

Relevant law and guidance

8. The Competition and Markets Authority (CMA) published guidance for care homes to help them comply with their consumer law obligations. I have summarised relevant parts below:
• Care providers need to specify at the outset, the circumstances in which the care provider may need to make changes without the resident’s consent. These circumstances should be clear and narrow in scope and effect.
• Fee increase terms should not allow care providers to increase fees arbitrarily. Terms which give care providers broad discretion to increase fees are likely to be unfair. To ensure compliance with consumer law, fee variation terms must set out clearly the circumstances in which the resident’s fees may change and the method of calculating the change.
• Terms must be transparent, unambiguous and not allow care providers to arbitrarily increase their costs in a way that the consumer could not have reasonably foreseen. Simply stating in the terms of a contract that fees may go up as a result of ‘increased costs’, ‘local market conditions’ or ‘the wider national economic picture’, will not make the terms fair. This type of general wording is both unclear as to what residents can expect and is open to misuse. This is because residents can have no reasonable certainty over what the increases will be.
• Fee variations should be agreed contractually in advance and prior to a resident accepting an offer of a place. The term should specify the circumstances in which a fee increase will arise and the method of calculation. Best practice is to consider fee variations by reference to a relevant, objective and verifiable published price index.

Key facts

9. Mrs Y moved into one of the Care Provider’s care homes in 2018. Mr X manages Mrs Y’s finances as his attorney and pays for Mrs Y’s care privately. The agreement between Mr X and the Care Provider said:
• The weekly fee was £950 and would remain the same unless the care provider gave four weeks’ notice
• A price increase is set annually by the Care Provider’s ‘determination of market circumstances’
• Fees would be reviewed yearly in April and at other times management may at its discretion consider necessary. The client would receive written notice of an increase which would not take effect for one month.
10. The Care Provider wrote to Mr X at the start of September 2019 to say it was increasing the fee by eight per cent. The letter did not explain how the increase had been calculated. I understand Mr X paid the increase without objection.
11. The Care Provider wrote again at the start of March 2020 to say it was increasing the fee by another eight percent. Again, the letter gave no explanation for the increase or any detail about how it had been calculated.
12. Mr X complained to the Care Provider about the increase. He said its correspondence gave no indication as to how the increase was calculated and bore no resemblance to the Consumer Prices Index, living wage or any other retail index. He asked the Care provider to confirm how it had calculated the increase.
13. The Care Provider and Mr X corresponded and in the end it agreed not to apply the March 2020 increase. As I understand it, no further increase has been applied in April 2021 which means Mr X has been paying the rate notified in October 2019.
14. Mr X also complained to the Care Provider about other matters which he has not raised with us. As part of the response to those complaints, the Care Provider sent Mr X a breakdown of how it costed each part of the fee, for example, staffing, food, transport, training and recruitment, cleaning, taxes and fees and so forth.

Findings

15. It is not for us to tell care providers what the fee should be or whether an increase is appropriate and if so, how much. Providers are entitled to increase fees and if residents or their representatives are unhappy, they may leave.
16. That said, we expect care providers to act in line with the CMA guidance described earlier in this statement.
17. The contract for Mrs Y’s care said the Care Provider decided increases based on its determination of market circumstances. This was fault because:
• It gives the Care Provider unlimited discretion to increase the fee without any explanation as to how it has calculated the increase.
• It fails to explain the method of calculating the increase and means residents or their representatives cannot predict increases and consider the implications of them.
18. This term is not in line with CMA guidance which says such terms are likely to be unfair under consumer law.

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Agreed action

19. Within two months of my final decision, the Care Provider will review its contracts to ensure compliance with CMA guidance. In particular, the review should ensure the fee increase terms specify the circumstances in which a fee increase will arise and the method of calculation with reference to a relevant, objective and verifiable published price index.
20. Within three months, the Care Provider will issue the amended contract to all new and existing residents who are self-funders.
21. We will require evidence of compliance.
22. Mr X wants the Care Provider to refund the fee increase applied in October 2019. It is not appropriate for me to recommend this because he could have given notice and sought a different, cheaper care home for Mrs Y.

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Final decision

23. The fee increase clause in the Care Provider’s contract was not in line with guidance from the Competition and Markets Authority and this caused uncertainty. The Care Provider will review and amend its contract.
24. I have completed the investigation.
25. Under the information sharing agreement between the Local Government and Social Care Ombudsman and the Care Quality Commission (CQC), we will share the final decision with CQC.

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Investigator's decision on behalf of the Ombudsman