Concept for - Consumer Rights Act - what's in your contract?

A care home’s agreement with its residents forms the contractual back bone of its relationship with them. However, the terms are subject to a number of regulatory requirements, including the Consumer Rights Act 2015.

Consumer Rights Act 2015 – what’s in your contract?

The Competition and Markets Authority has published detailed guidance on how it interprets some of the key aspects of the Consumer Rights Act 2015. This guidance is not a binding law in itself, however it does set out the CMA’s interpretation of the legal position. The guidance has been in force for some time, however we have seen a number of recent issues arising concerning resident’s rights, and it is worth highlighting some of the key principles set out within the Consumer Rights Act 2015 and guidance.

  • Terms need to be written in a clear and understandable way. Legal jargon should be avoided. 
  • Pricing should be clear. The resident should be able to identify the circumstances in which price will increase, and factors that will impact on the level of the increase. Where a resident’s fees are being funded through other sources such as the NHS or the Local Authority, the implications of any change in the third party funding should be clear. If a deposit is taken, arrangements need to be in place to ensure that any deposit is protected against care home insolvency, and that the circumstances in which it can be withheld by the care home are clear.
  • Care home to pass on savings to resident. Where residents leave before the end of the notice period and the care home is able to mitigate its loss by re letting the room, any savings should be deducted from the amount the resident is charged during the notice period. Similarly, where a resident leaves the care home for a period, for example, to attend a hospital visit or holiday, the care home should ensure that any reduction in its overheads as a result is passed on to the resident.
  • Terms in general need to be reasonable. Terms should not be unfairly weighted in favour of the care home. For example, clauses limiting a care home’s liability for its own wrong doing, or that allow a care home to make unilateral changes to the terms, are unlikely to be fair.
  • Other legislative issues. Particular care is needed where any form of credit is offered to a resident, as this in itself is a regulated activity. Care is needed to ensure that a care home is compliant with applicable data protection legislation.

The guidance runs to 144 pages, and this article highlights a small selection of the matters that need to be considered. The implications of a contract not complying with applicable legislation may include some or all of the terms being unenforceable. It can also result in enforcement action by the CMA or others. However, when carefully drafted, the resident agreement can assist in setting the resident and care home’s expectations of each other, apportioning risk, and in maintaining cash flow. The resident agreement can also be a useful tool for aiding in debt recovery.

If your resident contract has not been reviewed recently, or you would like to discuss the issues raised in this email, please contact our Corporate and Commercial team who will be happy to help.