OFT care homes price probe

A LONG-awaited probe into Britain's £9bna-year care homes industry will be launched this week by the Office of Fair Trading.

The OFT, headed by John Vickers, is to investigate if residents are given misleading information about charges and whether contracts spell out clearly any future rises in fees.

More than half-a-million people are in care homes, but there have long been suggestions that some are being exploited by unscrupulous operators.

The competition regulator said: 'We are concerned that older people and their relations might have to choose a care home in a hurry and that, once settled in, residents may be reluctant to change home. Such consumer behaviour might reduce competition.

'There might be a lack of transparency in relation to prices and this could distort residents' choice of care home. If contracts are not in place, or fail to have transparent clauses in relation to how prices can change, older people could be vulnerable to unreasonable and unexpected price increases.'

Controversially, the OFT has ruled out examining whether local authorities are abusing their dominant market position to negotiate bulk discounts for those residents whose bills they pay. The Consumers' Association fears this could mean private residents are paying more than they would otherwise, effectively subsidising the public sector - a view rejected by the OFT.

The Consumers' Association lodged a complaint with the OFT in December about the care home business and the OFT agreed in principle to an investigation earlier this year. But only now have the resources been found and the team assembled.

The inquiry is expected to be complete by next spring.