The Competition and Markets Authority (CMA) has ordered Care UK to refund more than £3m in compensation to residents it said have been unlawfully charged upfront administration fees.
The care home operator, one of the largest in the UK, must repay more than 1,600 care home residents charged as much as £3,000 in compulsory fees – or face legal action.
The watchdog said Care UK had broken the law by requiring a ‘substantial’ non-refundable administration fee from residents ‘very late’ in the admissions process.
However, Care UK has rejected the CMA’s claim that it has been in breach of consumer law, or that residents have been ‘disadvantaged’ by its historic fee structures.
In a statement, the operator said: ‘We have always been transparent about our application of administration fees and people have always had a wide choice between different care home providers.
‘The CMA is simply wrong to suggest residents who paid a one-off admission or administration fee, covering genuine and essential activities undertaken once, before admission, should be wholly or partially refunded.
‘Without the previous one-off fee, weekly fees would have been commensurately higher, so no loss has been suffered.’
The CMA’s move is part of its ongoing investigation into care home providers suspected to have contract terms in breach of consumer protection law.
Since the CMA investigation began last year, Care UK has stopped charging upfront admin fees.
It said it will defend any legal action the CMA takes against it and has been given until 10 January to respond to the CMA.
Care UK added: ‘We simplified our fee structure for residents funding their own care earlier this year to incorporate all one-off assessment and admission costs and adjusted our weekly fees accordingly. This approach is in line with the CMA’s final guidance.’
Earlier in the year, care home operator Sunrise Senior Living agreed to make individual pay-outs averaging £3,000 to former residents charged upfront fees dating back to 2015.