The Office of Fair Trading has found that two thirds of care-home contracts had fee- related terms that were either unfair or unclear, and in almost half it was not clear who should pay what.

The OFT said that it had no evidence that residents were being treated unfairly, but that the potential to do so existed. Many care homes were reluctant to produce their contracts when asked to do so. A tenth refused persistent requests.

Sir John Vickers, the OFT chairman, said: “About half of people going into care homes do so from hospital. It is a life-changing decision. It is generally a lasting decision, and it can be a large commitment financially.” He said that the large-scale study had revealed “a very mixed picture”. It was very hard for elderly people, and their families and friends, to penetrate a “maze of information”.

The report calls for greater price transparency, fairer contracts and a better complaints procedure, but it stops short of tackling the question of whether local authorities are paying fair rates to care homes for residential places, or whether the “top-up” fees paid by many residents for services above the statutory levels are justified or fair.

The OFT wants local authorities to publish directories of information on care homes in their area, their services, prices and what services the local authority will provide.

The study found that care-home residents pay an average £380 per week, but prices range from as low as £280 to as much as £700 per week, depending on the services offered.

The report calls for all older people to be given the price of accommodation and residential or nursing fees in writing before they move into a home.

The top-up fees paid by residents or their families for services over and above the government minimum standard ranged from £40 to £200 per week. Sir John said that many residents might not be aware that they were not obliged to pay such top-up fees to guarantee them places.

Local authorities are obliged to provide care to older people in need of it and, the report says, should “ensure that there are enough care homes, offering the necessary mix of services, to meet their obligations”. The OFT found that there was confusion about what those fees were expected to cover, with 30 per cent of local authorities offering no guidance.

One fifth of care homes charged those who were paying their own fees more for a place than residents who were funded by the local authority. The OFT refrained from criticising this, arguing that local authorities, by buying places in bulk, might be able legimitately to negotiate a lower rate.

More than 400,000 people live in 15,700 private, voluntary and local authority care homes. The OFT study was sparked by a complaint lodged by Which?, the consumer group, on behalf of the Social Policy Ageing Information Network. When it made the complaint last March, Which? was acting on behalf of a coalition of 30 older people’s charities, the Social Policy Ageing Information Network.

Which? branded the system “dysfunctional”, saying that it had failed residents and their families. The Network said that the OFT’s recommendations were a “major step forward”, but it was “shocked” to learn from the OFT that 40 per cent of local authorities suspected more top-ups were being paid than they knew about.

HOW TO CHOOSE A CARE HOME

Questions to ask care home staff include:

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