Residential Care Home Fees - new draft guidance issued

The Competition and Markets Authority (CMA) has recently closed its consultation on draft consumer law advice for UK care home providers on the charging of fees after a resident’s death.  The final guidance and an anonymised summary of responses that fall within the scope of the consultation will be published in Spring 2018.  The draft guidance will be of particular interest to charities running care homes and to charities representing the elderly.

The CMA has raised concerns about excessive fees being charged following the death of a resident. As a result, the CMA has published draft guidance for UK care home providers covering the charging of fees after a resident’s death and the treatment of their possessions.

The draft guidance recommends that care homes should only continue to charge fees for a period of three days following the death of a resident, and that charges should cease as soon as the room is re-occupied if this occurs within the three day period.

The CMA does, however, recognise that there may be cases where relatives need access to a room for longer than three days. The draft guidance therefore suggests that it may be appropriate for care home contracts to set out a further short period during which fees can be charged if the room remains uncleared.

Care contracts should also clearly set out what steps the home will take to clear the room if it is not done within the specified period. This should include provision for notifying the deceased resident’s representatives and details of any charges the home will make for clearing the room and storage.

The CMA has also recommended that care homes should include provision in their contracts to set out in what circumstances they will sell or otherwise dispose of a resident’s belongings. Such provisions should set out the timings of any sale, make provision for adequate notice to be given to the deceased’s estate, make it clear that the home is obliged to obtain a reasonable price for the belongings and explain that the sale proceeds, minus reasonable expenses, will be paid to the deceased’s estate.

Although this is currently only draft guidance, the Maria Mallaband Care Group has recently provided a voluntary undertaking to the CMA to drop its policy of charging fees after a resident has died.

In light of the CMA proposals, care providers should be wary of charging fees for more than three days after the death of a resident. Care providers should also start to consider practical solutions for the storage and disposal of residents’ belongings where appropriate.

Care charities, as with all charities, must recognise that their name and reputation are valuable.  Trustees must make sure that they avoid activity that might damage their charity’s reputation, e.g. by not complying with the final guidance and continuing to charge unreasonable fees after a resident’s death.  Once the final CMA guidance is issued in the Spring care home owners will need to ensure that their standard contracts comply with the guidance.