Summary: There was fault by the Council in its financial assessment of Mrs Y’s care charges. This caused avoidable distress and uncertainty. The Council will reconsider the decision that there had been a deprivation of capital, apologise and make a symbolic payment of £100 to reflect avoidable uncertainty and distress.

The complaint

1. Mr X complained on behalf of his mother Mrs Y about the Council’s financial assessment for Mrs Y’s charge towards the cost of her care and support. He complained the Council treated capital, which should have been disregarded, as notional capital.
2. Mr X said this caused avoidable distress because the Council implied Mrs Y was dishonest.

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The Ombudsman’s role and powers

3. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused significant injustice, or that could cause injustice to others in the future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
4. If we are satisfied with an organisation’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

5. I considered the complaint to us, the Council’s response to the complaint and documents set out in this statement. I discussed the complaint with Mr X
6. Mr X and the Council 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

7. A council may charge for non-residential care following a person’s care needs assessment. If so, it must follow the Care and Support (Charging and Assessment of Resources) Regulations 2014 and have regard to the Care Act Statutory Guidance (CSSG). (Care Act 2014, sections 14 and 17)
8. Councils may charge the full cost of an adult’s care if a person has £23,250 or more in capital. This is called the upper capital threshold. (CSSG paragraph 8.12 and Annex B paragraph 24.)
9. The council carries out a financial assessment to decide what a person can afford to pay. It must then give the person a written record of the completed assessment. The financial assessment considers a person’s income and capital.
10. Capital includes savings, investments and bonds (CSSG Annex B, paragraph 6)
11. Councils must disregard (ignore, or not include) some types of capital including the surrender value of a life insurance policy (Regulation 18(2) and Schedule 2 Care and Support Charging and Assessment of Resources Regulations 2014)
12. Where an investment bond includes life insurance policies that contain cashing-in rights by way of options for total or partial surrender, then the value of those rights must be disregarded as a capital asset in the financial assessment (CSSG Annex B paragraph 54)
13. Deprivation of capital is when someone knowingly reduces the value of an asset they hold for financial benefit. A council can treat someone as possessing capital if they have deprived themselves of it for the purpose of reducing their care costs The amount the Council decides the person has deprived themselves of is called ‘notional capital.’ (Care and Support (Charging and Assessment of Resources) Regulations 2014, Regulation 22 and CSSG, Annex B paragraphs 28 and 29).
14. Guidance says:
• A person may deprive themselves of capital in many ways, including:
1. converting assets into another form that would be subject to a disregard
2. Purchasing an investment bond with life insurance. (CSSG Annex E paragraph 9)
• Deprivation should not be assumed and there may be valid reasons why a person no longer has an asset. A council should ensure it fully explores this first. (CSSG Annex E, paragraph 5)
• Deprivation of assets means where a person has intentionally deprived or decreased their overall assets in order to reduce the amount they are charged (CSSG Annex E, paragraph 6)
15. In order for a deprivation to have occurred:
• The person must have known they needed care and support
• The person must have had a reasonable expectation they may need to pay towards care at the time of the deprivation
• The timing of the disposal. Could the person have a reasonable expectation of needing care and support and a reasonable expectation of needing to contribute to the cost at that time? (CSSG Annex E paragraph 11)
16. We published guidance called “Deprivation of Capital: Guidance for Practitioners” which sets out our expectations. We are likely to be critical of councils who have not followed the law and guidance by not considering the motivation or intent behind why someone has deprived themselves of an asset. We expect councils to make enquiries which include obtaining a full version of events from clients or their representatives before making a decision. Our guidance explains:

“the fact that someone may have existing care and support needs or know in general terms they may be expected to pay for care, may not solely be sufficient grounds to demonstrate there was an intent to benefit from deprivation. The Council will still need to consider the individual’s motivation… and explain the reason.”

What happened

Background and information from Mr X

17. Mr X manages Mrs Y’s finances as her attorney as she has dementia. Mrs Y has been receiving home care for many years. After Mrs Y’s husband died, the marital home was sold and Mrs Y moved to a bungalow close to Mr X so he could support her. Mr X placed cash from the sale of the marital home into a bond and an Individual Savings Account (ISA). He draws monthly payments from the bond and ISA to supplement Mrs X’s pension, to pay for her home care and her living costs. There was no involvement from the Council when the care and living arrangements were set up.
18. Mr X told me Mrs Y did not cope well living in the bungalow as her health was declining and so they decided she would move in with him. Her bungalow was sold and he placed some of the proceeds of the sale into the bond and ISA in December 2020. This is the payment the Council has decided is notional capital.

The Council’s involvement

19. Mr X told me Mrs Y had been in hospital at the start of 2024 and an occupational therapist advised him to contact the Council to see if it could provide care and support services for Mrs Y. He asked the Council to assess Mrs Y for care and support. The Council carried out an assessment and agreed a care and support plan with funding for home care when Mrs Y returned home from hospital.
20. The finance team completed a financial assessment in March 2024. This assessment included £21,0000 savings held in a building society account. The outcome was a maximum charge of £254 a week for Mrs Y.
21. A financial adviser acting for Mr X and Mrs Y emailed the Council’s financial assessment team in the middle of March enclosing information booklets about the bond and ISA plans. The financial adviser told the finance team Mrs Y took out the investments in 2018 to get a better return as cash accounts were only paying very low interest rates, the idea was to draw income and obtain growth to offset inflation. The adviser said:

“Neither of the actual policy documents show the additional death benefit but it is clearly defined in the master insurance agreement terms of both plans, copies of which I sent to you with the relevant pages marked out. Death benefit on these plans and funds is 100.1% based on the value at the date of death irrespective of whether the value was more or less than the client paid into the plan originally.  There has been no attempt to hide the assets or stop the income and certainly no attempt to reduce the values of the client’s funds as that would be deemed to be a deprivation of assets, she has drawn a sensible level of income to try to protect the capital value and disclosed incomes and values in full.”

22. The finance team wrote to Mr X at the end of April saying:
• Mrs Y has a bond and ISA and draws an income from these.
• Mrs Y paid £63,000 into her bond and ISA in December 2020
• The £63,000 would be taken into account as at the time of the investment there was a reasonable expectation of a need to fund future care.
• Ms X would therefore be charged the full cost of her care [as she was over the upper capital threshold with the notional capital of £63,000 included]

Complaint to the Council

23. Mr X complained to the Council at the end of April 2024, raising the same issues as in his complaint to us. He said an officer from the financial assessment team called him about further details of a specific investment and he was unable to answer their query and provided details of his financial adviser. Mr X said he was only told by a financial adviser in a meeting at the end of March 2023 that the bond and an ISA Mrs X both had life insurance that both items should be disregarded in the financial assessment,
24. The Council responded to Mr X’s complaint at the start of June. It said:
• There was no accusation of dishonesty
• The Council disregarded the original sum placed in the life assured bond, (in 2018) but treated the 2020 payment of £63,000 into the bond and ISA as notional capital.
• The only possible reason for investing those funds was for Mrs Y to deprive herself of these funds in order to obtain assistance with funding from the Council. At the time the payment was made, Mrs Y was needing care and was paying for this herself and therefore was aware she would need these funds to pay for care in future.
25. Mr X told me he did not know anything about the terms of the bond and ISA in 2020. He said he had spoken with his financial adviser and they said there was no way that they would have ever advised him because it would mean they (the financial adviser) would lose their livelihood if clients had an awareness of the disregard rules.

Findings

26. The Council relied on CCSG Annex E paragraph 9 when it decided the 2020 transfer was a deprivation of capital because assets were converted into a form that would be disregarded in the financial assessment. It is not our role to decide whether there has been a deprivation; this is for the Council. However, we expect councils to have regard to Annex E of CSSG and if they do not, we are likely to find fault in the process of reaching the decision.
27. This decision was made with fault because:
• The complaint response refers to Mrs Y’s awareness, state of knowledge and motivation in 2020. Reference to Mrs Y in the Council’s complaint response was inaccurate and caused Mr X avoidable distress. There is no evidence the Council considered Mr X’s awareness, state of knowledge or motivation at the time of the payment in 2020.
• There is no evidence the Council sought information about Mr X’s motivation for the 2020 transfer. We expect councils to consider the individual’s motivation and for there to be a full exploration of all the circumstances in 2020. For example, there will likely be written records of the financial adviser’s advice to Mr X in 2020, contemporaneous notes of meetings and emails to and from Mr X. The Council failed to act in line with Annex E paragraph 5. This failure means there is uncertainty about the outcome had the Council explored the issue fully and given a full written decision.

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Agreed action

28. The Council will within one month of my final decision:
• Apologise for the avoidable distress caused by the complaint response. We publish guidance on remedies which sets out our expectations for how organisations should apologise effectively to remedy injustice. The organisation should consider this guidance in making the apology I have recommended in my findings.
• Make Mr X a symbolic payment of £100 to reflect his distress and uncertainty.
• Reconsider its decision, considering any information/evidence Mr X wishes to provide. The Council should give Mr X a written decision with a full explanation. The reconsideration will be done by a senior officer who has not been involved with the case previously.
• If the decision is reversed, the Council should review the financial assessment accordingly and backdate it to the date of the original financial assessment in March 2024.
29. The Council should provide us with evidence it has complied with the actions in the previous paragraph.

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Final decision

30. There was fault by the Council in its financial assessment of Mrs Y’s care charges. This caused avoidable distress and avoidable uncertainty. The Council will reconsider the decision that there had been a deprivation of capital, apologise and make a symbolic payment of £100 to reflect avoidable uncertainty and distress.
31. I completed the investigation.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman