Will UK consumer law destroy the care home market?
Adult Social Care, Housing and Community Transport, followed closely by Planning are all challenging if not dysfunctional aspects of local service challenge. This very worrying article demonstrates the desperate need for some new thinking about growing old in our current way of doing things. It tells us:
Adult social care is on the financial ropes. Last year it was the introduction of the “national living wage”, this year it’s the requirement to backdate pay for sleep-in shifts. In both cases, the government is being urged to step in to prop up care providers.
There is, however, a new threat lurking in the wings that could plunge social care into further chaos: the Competition and Markets Authority (CMA). In December 2016 the CMA launched a study into care homes amid concerns that the current system could be creating competition and consumer protection problems. An update paper was published in June that raises three main issues: information to support choice, better redress of grievances and compliance with consumer law.
Information and choice
The report notes that at the point of needing support, most individuals and families are poorly informed and have done little or no planning or research. Location is often the most critical factor in their decision, choice is often limited and people are unsure what questions to ask or how to assess options. Overall, the report says, people do not think of themselves as consumers when it comes to social care; they struggle with the notion of exercising choice and rarely move between providers. In short, the basic requirements for a market are not in place.
Redress of grievances
A functioning market requires proper means of redress for dissatisfied customers. The CMA reports low levels of complaints, fears of retaliation in the event of a complaint and lack of understanding of the formal procedure. It also notes concerns about “termination clauses” that are invoked to evict residents who have made complaints.
Consumer law compliance
This is the most far-reaching aspect of the CMA’s report, as a litany of malpractices come to light. These include: the lack of information about prices; demands for substantial “deposits” and other upfront payments; a raft of hidden extra charges and surcharges; demands for top-up payments without local authority agreement; and fees charged after death.
While all of these practices suggest a seedy side to the care home business, it is the CMA’s concerns about the price differential between local authority and self-funded residents that could have the biggest effect. There is now compelling evidence that self-funded residents are paying higher fees and effectively subsidising state-funded residents sharing the same home, and that without this much of the social care market would not be viable. Research indicates that self-funders are paying 43% more on average than state-funded residents in the same home, for the same type of room and the same level of care. This will surely be unacceptable to the CMA