Consumer law in acquiring elderly care businesses post-Brexit
In November 2018, the UK’s Competition Markets Authority (CMA) issued guidance around consumer law specifically concerning care home providers for elderly people over the age of 65.
Where are we now?
In November 2018, the UK’s Competition Markets Authority (CMA) issued guidance around consumer law specifically concerning care home providers for elderly people over the age of 65. The guidance tries to steer care home operators away from contractual terms that are not compliant with the Consumer Rights Act 2015 (CRA).
Whilst the CRA came about as a vehicle to implement a European Union directive, any operators under the impression that Brexit will let them off the hook are gravely mistaken. On issuing its guidance the CMA committed to conducting a compliance review in November 2019 to assess the CRA compliance of operators and the progress made since the publication of its advice. The CRA is statute of England and Wales and will remain in force for the foreseeable future, Brexit or Remain, deal or no deal.
The CMA and other enforcers, such as Trading Standards Services and the Care Quality Commission, may take action against care homes that do not comply with consumer law. As recent as September 2019, our experience is that the significant majority of operators have not implemented adequate changes to achieve compliance, with many having cherry-picked the obligations that they are willing to express in their contracts with residents and others ignoring or seemingly being unaware of the guidance altogether.
Common pitfalls for which the CMA gives clear guidance on how to avoid are:
- Inadequate up-front information;
- Unwarranted administrative charges at the outset;
- Vague rights to amend contractual terms and charges;
- Charges not reflective of loss suffered by operator in the event of non-compliance by the resident;
- Insufficient notice provisions for termination;
- Fees payable post-death;
- Onerous charges during periods of temporary absence; and
- Excessive interest rates for delayed payment fees.
What does this mean?
In the buoyant market of mergers and acquisitions in the elderly care sector, this presents a risk for buyers that, until now, has never taken such a degree of prominence in their due diligence investigations. Failure to comply with consumer law can have significant financial implications as well as reputational damage, with the CMA already requiring repayment of certain fees by a number of high profile providers deemed in breach and having the power to take court action against the non-compliant.
At almost 150 pages, it would be unwise of us to attempt to summarise the entire CMA guidance here. That said, regular areas of non-compliance have become apparent over the past 12 months and it is important for a buyer to remedy these issues on completion. Contract terms which are found to be unfair will be unenforceable against a resident and any money paid as a result may be recoverable and residents may also seek compensation so buyers would be wise to identify whether they need indemnity cover under the acquisition document as early in the process as possible.
Through assisting clients with their internal compliance audits, bringing existing contractual terms with residents and up-front materials into line with the CRA and expertly carrying out due diligence on acquisition targets, we have a wealth of experience in working with businesses to ensure that they, and any potential part of their group in the future, are CRA compliant and following the CMA guidance. Feel free to contact Clare Auty or Joel Nixon to discuss your needs.
Related expertise
You may be interested in...
Opinion
Plans to amend NHS pension rules to bolster NHS workforce approved by government
Opinion
Increase to 20 hour limit on supplementary employment for Health and Care Worker visa holders
Legal Update
Supreme Court will hear Worcestershire case on local authority responsibility for Section 117 Aftercare in April 2023
Published Article
Thinking outside the box
Legal Update
Cauda Equina Syndrome and application of the new GIRFT pathway
Opinion - Maternity services
University Hospital Leicester hold their inaugural Maternity Safety Conference
Opinion
Junior doctors vote unanimously in favour of strike action
Opinion
Can toilet facilities amount to sex discrimination?
Published Article
Digital Twin Technologies: key legal contractual considerations
Opinion
Consultation launched on minimum ambulance service levels during strike action
Opinion - Maternity services
Changes to redundancy protections for employees post-maternity leave
Legal Update - Shared Insights
Shared Insights: Coroners’ Question Time
On-Demand
Future of Care - Retirement Living webinar
Press Release - Careers
Browne Jacobson health lawyer wins major accolade at Made in Manchester Awards
Opinion
BMA issues medical locum rate card for junior doctors
Legal Update
Employee who refused to wear a face mask fairly dismissed
Opinion
New toolkit to support safer recruitment in the care sector
Legal Update
Green Leases for the NHS
On-Demand
Environmental, social and governance (ESG) in the context of retirement living
Guide
Government response to the consultation on the Higher-Risk Buildings Regulations
Published Article
The first 100 days for Integrated Care Boards
Opinion
Menopause and the workplace
Opinion
Government introduces new “anti-striking laws” to be discussed in Parliament
Press Release - Maternity services
Father Christmas comes to University Hospital Coventry and Warwickshire care of Browne Jacobson’s Birmingham Office Community Action Group
Opinion - Maternity services
The Patient Safety Incident Response Framework (PSIRF) and its impact on maternity services
Legal Update - Shared Insights
Shared Insights: Looking ahead to 2023 – what Health and Care employers need to know
Opinion
Coroner’s refusal to issue a Prevention of Future Deaths Report following death in prison custody inquest was lawful
Article
Mental health, eating disorders and placement of young people
Legal Update
LPS consultation and ‘go live’ planning
Opinion
Consultation launched on plans to amend NHS pension rules to bolster NHS workforce
Legal Update
Getting ready to face Industrial Action
Legal Update - Shared Insights
Shared Insights: Prolonged disorders of consciousness
Online Event
Mock Inquest Training Sessions
Published Article
How AI and technology can transform the healthcare sector
On-Demand
The UK's green agenda - the outcomes of COP27 and actions since COP26
On-Demand
Insights from the Chief Coroner by His Honour Judge Thomas Teague, KC
Opinion
BMA advises consultants not to accept less than the BMA minimum rate card for extra-contractual work
The BMA is advising all NHS / HSCNI consultants to ensure extra-contractual work is paid at the BMA minimum recommended rate and to decline offers of extra-contractual work that doesn't value them appropriately.