Care UK told to repay more than £3m charged as upfront administration fees, or face legal action
December 7, 2018
Major care home operator Care UK faces legal action by the Competition and Markets Authority (CMA) unless it pays more than £3m in compensation to more than 1,600 residents who were charged a compulsory upfront ‘administration’ fee of as much as £3,000.
The CMA’s ultimatum comes as part of its ongoing investigation, launched in 2017, into a number of care homes over concerns that some of their contract terms could breach consumer protection law.
The CMA believes Care UK was breaking the law by requiring a substantial non-refundable 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 residents were told about the fee very late in the admission process.
Care UK has recently stopped charging this fee following intervention by the CMA. However, the company has been notified that the CMA will take action through the courts unless it also refunds people who have been affected. Care UK has been given until 10 January 2019 to respond.
The CMA has already secured more than £m in compensation from another large care home provider and other homes dropping contract terms relating to after death fees.
In November, the CMA issued guidance to care homes to help them understand their responsibilities under consumer protection law, as well as an open letter urging them to review their practices in light of the guidance immediately. Care homes may need to change their contract terms and business practices as a result.