You are here: Home - Retirement - Retirement planning - News -

Care home review: £1bn funding shortfall and unfair fees

0
Written by: Paloma Kubiak
30/11/2017
A year-long review of the care home sector has identified a number of issues, including unfair fees, inadequate support for residents and their families, as well as insufficient funding and stock.

The Competition and Markets Authority launched a review of the care home sector in December last year to see how well they’re complying under the law as well as to look at reports of potentially unfair practices and contract terms being used by some care homes.

The CMA has now said urgent action is needed across the UK care home market which caters for 430,000 elderly people, with the market estimated at £15.9bn. However, its financial analysis reveals there’s a funding shortfall of £1bn a year.

This is because councils are paying fee rates for the residents they fund which are below the costs care homes incur. As a result, this has led to care homes ‘propping up their finances’ by charging higher prices to those who pay for their own care (self-funders). On average, self-funders’ fees (£44,000 per year) are around 40% higher than those paid by councils.

Often those looking for a care home are doing so at a distressing time, meaning decisions are being made in challenging circumstances. But the CMA found that basic information and support isn’t available to help them make informed decisions.

Further, the system for redress and feedback needs to be improved. The CMA said there is also “too great a risk of residents being treated unfairly, and in breach of their rights under consumer law”. It highlighted where homes are not being clear on prices or terms and conditions, residents’ deposits aren’t being protected effectively against the risk of insolvency. It also said in some cases, care homes aren’t being fair when asking a resident to leave or when they ban visitors.

Earlier this year, the CMA found that some care homes were charging families after residents had died and it’s now written to these providers requiring them to change their contract terms. It will also consult on new guidance on fees charged after death, stating: “It will expect all care homes to start reviewing their practices now in the light of our findings, and where necessary make changes. If we continue to find non-compliance, homes risk enforcement action”.

Given the UK’s ageing population, the sector “must grow substantially” but the CMA said there’s currently not enough investment in new accommodation for council-funded residents.

CMA chief executive, Andrea Coscelli, said: “Care homes provide a vital service to some of the most vulnerable people in our society. However, the simple truth is that the system cannot continue to provide the essential care people need with the current levels of funding.

“Without substantial reform to the way that councils plan and commission care, and greater confidence that the costs of providing care will be covered, the UK also won’t be able to meet the growing needs of its ageing population.”

See YourMoney.com’s How to pay care home fees for more information.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • Cost of taking a mortgage holiday revealed: The average cost of a 3 month #mortgagepaymentholiday is £665.08, and… https://t.co/gWHI7Lo8zl
  • RT @BlackstockPR: "The government needs to grasp that mounting rent arrears are a serious economic issue that will impact many buy-to-let l…
  • "The government needs to grasp that mounting rent arrears are a serious economic issue that will impact many buy-to… https://t.co/KXusvi1RvR

Read previous post:
‘Is it still worth saving money in a cash ISA?’

The popularity of the cash ISA has fallen as have the rates on offer, so much so that interest rates...

Close