Local authorities are underfunding care provision by around £1bn every year, the Competition and Markets Authority (CMA) has found.
In its final report from its market study into care homes, the CMA estimates that the average cost of care for a self funder is around 40% more than local authorities pay.
CMA Chief Executive Andrea Coscelli, said: “Care homes provide a vital service to some of the most vulnerable people in our society. However, the simple truth is that the system cannot continue to provide the essential care people need with the current levels of funding.
“Without substantial reform to the way that councils plan and commission care, and greater confidence that the costs of providing care will be covered, the UK also won’t be able to meet the growing needs of its ageing population.”
The CMA recommends local authorities carry out enhanced planning so that they can meet the future care needs of residents.
It urges proper oversight of commissioning practice to ensure plans will deliver the care required. The report also calls for measures to provide confidence to investors that they will receive adequate fee rates.
In further findings, the CMA says it is taking enforcement action against a number of providers who are unfairly uncharging upfront fees as well as those charging for extended period beyond a resident’s death. The CMA says it will be consulting on new guidance on charges after death in early 2018.
New standards on avoiding consumer law infringements as well as consumer rights advice will be issued in spring 2018.
Andrea added: “Of all people, it is especially important that care homes residents are treated fairly and have the full protections of consumer law. We will be taking steps to assist care homes in understanding their obligations, but we are also taking enforcement action now on some issues where we believe the law is being broken.”
The CMA also recommends the development of model contracts to encourage best practice and urges the Government to introduce stronger rules on consumer law compliance which can be monitored by the CQC.
Additional regulations on having providers include fees and terms and conditions on their websites are also suggested, as well as the requirement to notify the CQC when residents are asked to leave or visitors are banned.
The CMA also suggests action on current complaints procedures, including having these assessed during CQC inspections.