People need better protection from high care home fees, say charities

The Office of Fair Trading (OFT) will investigate the availability and accuracy of information about charges and the transparency of contracts.

The move is in response to a so-called super-complaint lodged by the Consumers' Association last year.

The study will not address a concern that private residents are subsidising publicly-funded places.

Serious questions

John Vickers, the OFT chairman, said serious questions about price information had been raised by the Consumers' Association complaint.

"Our study will make a thorough assessment of this and other factors which may have a bearing on competition and consumer choice in this market."

But the Consumers' Association said it had "mixed emotions" about the announcement.

STUDY WILL FOCUS ON Competition and choice in the market Transparency of fees and extra charges Transparency of contracts and fee increases

"I think we are pleased with two-thirds and disappointed with one third of it," principal policy officer Phil Evans told BBC News Online.

"We have a market study that... will make lives better for people."

However, the consumer group is disappointed the study will not address the "key issue" of "local authority buyer power".

Local authorities tend to pay less for their care home places because they can negotiate bulk discounts.

The Consumers' Association believes private residents end up plugging gaps in funding left by these deals, effectively cross-subsidising fees.

This claim was central to the Consumers' Association case when it lodged its complaint in December.

The OFT, however, said it had dealt with the issue in a previous BetterCare decision.

In this decision, the OFT said paying low purchasing prices was only likely to amount to an abuse of a dominant position in "exceptional circumstances".

The consumer group has new powers under the Enterprise Act to request OFT investigations, a process known as a super-complaint.