Fairer contracts for care home residents

51/05 21 March 2005

Residents and their families at over 800 care homes will in future receive fairer and clearer contracts after OFT action led to 10 care home operators changing their contracts.

Care homes providers covering around 50,000 places in over 800 homes nationwide, including BUPA, Southern Cross Healthcare Ltd, Westminster Healthcare Ltd, Four Season Health Care (UK) Ltd and Elizabeth Finn Trust (see note 1 for full list), have given undertakings to the OFT that they will change standard terms in their contracts with consumers that the OFT believes are potentially unfair.

Examples of the unfair terms objected to by the OFT included those that:

let the care home make frequent or arbitrary increases in residents' fees
imposed unfair penalties, restrictions or obligations on the resident
allowed the care home to exclude liability for loss or damage to the resident's property even due to a fault on the part of the care home
were either not clear about how long fees were payable for after the death of the resident, or imposed other unclear charges.

The action comes after Age Concern referred to the OFT a number of care homes operators' contracts that it believed were unfair on residents.

Businesses are required to comply with the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) by ensuring that they use fair and clear terms in their standard agreements with consumers.

The OFT has issued specific guidance for care home operators on the UTCCRs, and given examples of unfair terms and ways of revising them. It has also published a booklet for consumers entitled 'Fair terms for care' so that they know the factors to consider when they look at care homes' terms and conditions (see note 2).

Sir John Vickers, OFT Chairman, said:

'Care homes offer services vital to the future security and well-being of residents and their families. Residents must have fair contracts that clearly set out their rights and obligations'.

NOTES

1. The OFT has received undertakings from: Brunelcare, Four Seasons Health Care Ltd, BUPA, Elizabeth Finn Trust, Orchard Manor Private Nursing Home, Professional Health Care, Sanderbrand Ltd (company now run as Orchard Lodge Nursing Home) Southern Cross Healthcare Ltd, St Nicholas Healthcare Ltd and Westminster Health Care (UK) Ltd.

2. Download Guidance on unfair terms in care home contracts (pdf 214 kb), published October 2003 and the Fair terms for care leaflet (pdf 71 kb) January 2004. Both these publications can also be ordered in hard copy from our publications page (see press release 12/04)

3. Following a super-complaint from Which?, the OFT is currently conducting a market study in the care homes sector which is expected to report in May (see OFT press release 35/04).

4. The Unfair Terms in Consumer Contracts Regulations 1999, superseding the Unfair Terms in Consumer Contracts Regulations 1994, apply to standard contract terms used with consumers. The UTCCRs protect consumers against unfair standard terms in contracts they make with traders. The OFT, and certain other bodies, can take legal action to prevent the use of potentially unfair terms. A term is likely to be considered unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of consumers. The regulations say that a consumer is not bound by a standard term in a contract with a trader if that term is unfair. Ultimately, only a court can decide whether a term is unfair.

5. If the companies breach the undertakings the OFT could seek a court injunction. Failure to obey a court injunction could result in proceedings for contempt of court.

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