RWK Goodman - August Bulletin
Residents Contracts: Balancing Compliance and Commerciality
It has been nearly 7 years since the Competition and Markets Authority (CMA) undertook an investigation into care home contracts in the elderly sector. This resulted in the issue of a substantial 139-page guidance document, several high-profile investigations and court action involving some national names. Following an unsuccessful case against Care UK in 2021, the guidance was edited and re-issued and the CMA has, for now, gone very quiet on the topic. It has never been clear whether the guidance is statutory (binding) or not. A link to the guidance is here.
So what is the current legal position for care operators?
There has been no change to consumer legislation which underpins how operators can contract with residents. The relevant law is contained in The Consumer Protection from Unfair Trading Regulations 2008 and The Consumer Rights Act 2015. Cancellation of contracts signed remotely is covered by The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, and yes, oddly, this can apply to residents contracts. In summary operators are required to:
ensure that statements made in marketing, admissions procedures and contracts (both in writing and verbally) are true, complete and accurate;
give prospective residents and their families the information they need to make informed decisions;
provide fair contract terms, ensuring that key terms are highlighted so residents can understand all the essential features before entering into the contract;
offer a 14 day cancellation period for contracts signed away from the care home or remotely.
Whilst the CMA has not been seen in action recently, it would be foolish to disregard its guidance entirely. There are key aspects of the guidance which have been successfully enforced by the CMA, albeit on a voluntary basis. These include provisions relating to the charging of fees on death, deposits and charging for pre-admission services. It is notable that the CMA has new powers from 6 April 2025 which allow it to directly enforce consumer law and issue fines up to 10% of an organisation’s turnover. It can also open a direct consumer enforcement investigation and apply to court for an interim enforcement order to prevent or stop consumer harm.
In our view there has always been some tension between the guidance and the commercial needs of operators. Part of the challenge is to ensure that contracts are consumer compliant but also protect the operator against cost pressures, changes in funding and unpaid debts. It is vital that contracts contain enforceable provisions permitting operators to assess prospective resident’s finances both in advance and during the contract and clearly set out what happens when funding needs change. This is not just about the contract. This is about looking at the whole admissions process, engaging at the earliest point with prospective residents to understand their circumstances, how and who is paying the fees and how long that arrangement will last. The contract needs to include the right protections for both parties but real value can be added in training admissions staff on the importance of discussing the key terms of the contract with residents and their families ahead of time, with particular emphasis on long-term funding and finances.
RWK Goodman provides advice on admissions processes and residents contracts. Please do get in touch with Hazel Phillips if you would like an initial free review of your contract.
Buy and Build Acquisitions in the UK Social Care Sector
The UK social care sector is seeing increased consolidation, as operators seek to scale by acquiring additional care homes, supported living services, and home care businesses. For care providers pursuing a buy and build strategy, legal due diligence isn’t just important, it is essential.
Unlike other sectors, social care businesses operate in a highly regulated, people-centric environment. That means legal risk does not just affect financial value, it affects people’s lives, compliance ratings, and the future viability of the group. Legal risk and regulatory risk go hand-in-hand. Buy and build success is not just about financial performance, it is about protecting service users, ensuring continuity of care, and upholding your group’s reputation.
Investing in robust legal due diligence is one of the most effective ways to make sure each acquisition supports your long-term mission rather than becoming a compliance headache.
Why Due Diligence Matters in Social Care Acquisitions
Every care provider you acquire brings with it its own regulatory history, CQC inspection outcomes, workforce structure, property arrangements, and contractual obligations.
Missed legal issues, whether it is an unresolved safeguarding matter, an invalid lease, or poor employment documentation can result in regulatory sanctions, reputational damage, or integration delays that disrupt service delivery.
What to Prioritise in Legal Due Diligence
We work with operators across the social care sector to provide pragmatic legal due diligence that balances compliance, speed, and risk management. Here are some key areas we recommend focusing on:
Regulatory Compliance & CQC Status
Understanding the target’s CQC inspection history, registration status, conditions on the provider’s registration, and any outstanding enforcement actions is critical. You must also assess whether the transaction itself triggers a registration change or notification requirement.
Employment, Staff, and Workforce Management
Care providers rely heavily on a stable, well-trained workforce. Employment due diligence should include contract reviews, TUPE implications, training and DBS checks, agency reliance, and any ongoing staff disputes, immigration complication, all of which could impact care continuity and reputational risk.
Property & Leasehold Arrangements
Many care homes and services operate from leased properties. Legal due diligence must identify break clauses, landlord consents, planning use classifications, and any compliance issues with fire safety or health and safety regulations.
Contracts & Local Authority Agreements
You will want a clear picture of the target’s funding arrangements, especially with local authorities or NHS bodies. This includes reviewing framework agreements, fee structures, and any clauses that could be affected by a change of ownership.
Historic Claims & Insurance Cover
Social care businesses may be exposed to historic claims related to care quality, safeguarding, or health and safety. Reviewing litigation history, complaints, and insurance cover, including run-off policies is essential to ensure protection after completion. We can work with your insurance broker to ensure that suitable protections are in place.
Building a Scalable Legal Framework for Growth
A well-designed legal due diligence process is a strategic asset for operators looking to grow through multiple acquisitions. We help care providers build legal playbooks that include:
A repeatable, sector-specific due diligence checklist;
Specialist support on CQC and regulatory transfer planning;
Red flag reporting focused on legal risks; and
Guidance on integration of HR, policies, and governance post-completion.
This allows you to move quickly but with confidence as you grow your care group.
Growing Your Social Care Group?
We support social care operators with tailored legal due diligence designed for regulated environments.
Contact our social care legal team to discuss your next acquisition and how we can support your buy and build strategy.