A letter before action has been issued by the CMA to Barchester Healthcare in relation to administration fees and charges following a resident’s death.
The action comes as part of the CMA’s probe into potential care home breaches of consumer law for which it was handed new powers to fine by the government in June.
The CMA said: “The CMA believes Barchester was breaking consumer protection law by requiring a substantial non-refundable upfront administration fee from residents for which they received no services or products in return. It 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. With regards to fees charged following a resident’s death, the CMA believes that Barchester was breaking consumer protection law by charging the fee for a period longer than outlined in the CMA’s guidance.”
While noting that Barchester has stopped charging an administration fee in January 2019, the CMA said it had not made satisfactory moves to offer compensation for consumers who had been charged the fee.
A Barchester spokesperson said: “Over the last few months and years we have engaged with the Competition & Markets Authority (CMA) regarding the issue of charging upfront fees to prospective residents before they move into one of our homes. Our position, supported by many years working with thousands of residents and their families, as well as by legal advice, is that charging an initial fee to cover placement costs, rather than recouping those costs via a higher weekly fee, is the fairest to all residents as residents who stay longer would ultimately pay more than they otherwise would have.
“However, it is clear that the CMA disagrees, and as a result the industry fell into line with the regulator’s position. As a consequence, as of 14 January 2019, we have no longer charged an upfront fee to prospective residents before they move into one of our homes. We have, though, continued to charge a fully transparent, fully refundable, deposit to secure a place at the care home of the customer’s choice. As part of the new charging structure, which applies to new residents only, the costs currently met by the upfront charge were absorbed as an increase into the weekly charge. The terms for existing residents have been unchanged. The new terms have been posted on our website in line with our policy of being fully open and transparent.
“Given the legal opinion in support of our position, and the fact that we are now in line with the rest of the industry, it is hard to understand why the CMA has chosen to take this action.”