CMA launches court action against Care UK

Court proceedings have been issued against Care UK after it refused to refund residents who had to pay a compulsory upfront fee.

In December, the Competition and Markets Authority (CMA) told the care provider that it must refund more than 1,600 residents who were charged an ‘administration’ fee, which was as much as £3,000, or face legal action.

The authority believes the provider was breaking consumer protection 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 that residents were told about the fee too late in the admission process.

Care UK has stopped charging the fee but has not agreed to refund any residents.

As a result, the CMA has issued court proceedings and is now seeking a court order to secure refunds for those affected. A court will decide if it has breached consumer protection law.

The CMA argues that in charging the fees, Care UK used contract terms and practices that were unfair and contrary to the law. It also believes the provider should be prevented from charging these – or similar fees – in the future.

In November, the CMA issued advice to help care homes understand their responsibilities under consumer protection law, as well as an open letter urging them to review their practices.

In May, Sunrise Senior Living agreed pay more than £2m in compensation to former residents who were unfairly charged upfront fees.

Care UK rejected the claims in December and said nothing has changed by the latest development. It plans to defend ‘any legal action the CMA may choose to take’.