Action is being taken under s217 of the Enterprise Act 2002 and comes after the provider failed to address concerns set out last year, the authority said.
In July, a CMA letter was issued to Barchester Healthcare Ltd, Barchester Healthcare Homes Ltd, Grove Ltd and Barchester Holdco (Jersey) Ltd in relation to an administration fee and fees charged in the event of a resident’s death.
The CMA believes Barchester was breaking consumer protection law by requiring a ‘substantial non-refundable upfront administration fee’ from residents for which they received no services or products in return.
It believes the provider’s description of the charge was misleading and that residents were told about the fee too late in the admission process.
With regards costs following a resident’s death, the authority believes Barchester was breaking consumer protection law by charging a fee for a period longer than outlined in CMA guidance.
Although Barchester stopped charging an administration fee in January 2019, the CMA is not satisfied there was financial redress for consumers in relation to the charge.
Barchester Healthcare said it ‘fundamentally’ disagreed with the CMA’s position.
It added: ‘We have made some adjustments in line with the industry in changing our upfront admin fees and in the event of the death of a resident, we have reduced the fees to be paid from 14 days to seven days.
‘We believe our approach in giving relatives time to make the necessary arrangements, but not to charge for longer than they need the room is the right one, taking everything into consideration. Our position is informed from many years supporting and caring for thousands of residents and their families.’
In June 2017, the CMA opened an investigation into care home providers, due to concerns some of the contract terms and practices used may have breached consumer law.
Court proceedings against Care UK that aim to seek redress for residents who were charged a compulsory upfront administration fee are due to be heard in summer.
In May 2018, Sunrise Senior Living said it would pay more than £2m in compensation to former residents unfairly charged upfront fees.