Home News Residential Conveyancing High Court Exonerates Care Homes Provider Accused of Exploiting Clients

High Court Exonerates Care Homes Provider Accused of Exploiting Clients

It is important not to under-rate the good sense of the average consumer. The High Court resoundingly made that point in exonerating a care homes provider that was accused by the Competition and Markets Authority (CMA) of levying unfair and exploitative administration fees on its clients.

The fees were in most cases equivalent to the cost of two weeks’ accommodation in a care home. They were charged to self-funded residents on admission to a home and were said by the provider to fairly reflect the costs involved in the admissions process. Following an investigation, however, the CMA launched proceedings.

The CMA said that the administration fees were unfair, misleading and exploitative. It alleged breaches of the Unfair Terms in Consumer Contracts Regulations 1999, the Consumer Rights Act 2015 and the Consumer Protection from Unfair Trading Regulations 2008. The CMA argued that consumers had suffered loss as a result of the unfair fees and that the provider should be ordered to repay administration fees it had received over a period of almost three years.

Ruling on the matter, the Court recognised that choosing the right care home for an elderly or disabled loved one can be a difficult and stressful task. It found, however, that average consumers could be expected to make such choices after careful consideration. The degree of stress involved was not so great as to impair the objectivity and rationality of an average consumer’s decision-making.

Dismissing the CMA’s case, the Court found no reason of principle why the provider should not charge prospective residents or their relatives separate fees in respect of the significant cost of providing pre-admission material and services. The fees did not cause a significant imbalance in the contractual relationship and the provider had a legitimate interest in imposing them.

The Court noted that the majority of residents paid the fees without demur and that there were very few complaints about them. Average consumers would have understood pricing information they were given and the evidence did not suggest that they would have viewed the fees as exorbitant or unreasonable. They would have readily understood that, for simplicity’s sake, the fees were set on a standard basis and might be more or less than the specific costs of admitting an individual resident.

There was no basis on which the provider could be described as having aggressively exploited a position of power over consumers. It was logical and reasonable to discuss the administration fees once a prospective client had visited a home and confirmed his or her interest. Given that they represented only a very small proportion of the total fees charged to a typical resident, their existence was in any event unlikely to have made any material difference to an average consumer’s transactional decision-making.

29 November 2021
Last Updated
12 April 2022