The Competition and Markets Authority (CMA) has told Care UK that it must refund over 1,600 residents who were charged as much as £3,000 in upfront fees or face legal action.
It comes as part of the CMA’s ongoing investigation, launched in 2017 into concerns that some care homes were breaching consumer protection law (see BREAKING NEWS: CMA investigates whether care homes are breaking the law).
The CMA said it believed Care UK was breaking the law by requiring residents to pay a substantial non-refundable fee for which they received no services or products.
It also argued the provider’s description of the charge and what it was for was “misleading” and that residents were informed of it very late in the admission process.
Care UK has recently stopped charging the fee following the CMA’s intervention but the department has notified it that it must now pay out more than £3m in compensation to those affected by the charges.
Sunrise Senior Living earlier this year agreed to paid more than £2m in compensation over the fees (see CMA secures £2m compensation for Sunrise residents).
Care UK said it did not agree with the CMA’s views that there are no one-off costs with admission to a care home, citing the examples of initial care assessments and installation of specialist equipment.
The provider said the one-off fees had the “virtue” of lowering weekly fees and particularly benefited longer stay residents.
A Care UK spokesperson said: “We do not believe there is any evidence whatsoever to suggest residents have been disadvantaged or that our historic fee structures were in breach of consumer law. We have always been transparent about our application of administration fees and people have always had a wide choice between different care home providers.”
Care UK said it simplified its fee structure for self-paying residents earlier this year to incorporate a one-off assessment and admission costs and adjusted its weekly fees in line with CMA guidance.
The provider said it was a sector leader in pricing transparency, having begun to publish indicative care home fees in 2014, a practice that few others follow.
“Our admission processes ensure prospective residents are aware of key terms in our contracts, including our fee structure, very early in their discussions with us and well before they finalise their choice of care home,” the spokesperson added.
Care UK said it would defend itself against any action taken by the CMA.
The CMA said the provider had until January 10, 2019 to respond.