Croydon Council Ordered to Repay £75,000 Care Fees Croydon 2026

Key Points

• Croydon Council wrongly charged a vulnerable elderly resident £75,000 for her care, forcing her family to sell her home before she died.
• The Local Government and Social Care Ombudsman upheld a complaint against the local authority for failing to recognise her legal entitlement to free Section 117 aftercare under the Mental Health Act 1983.
• A watchdog decision published on 29 June found Croydon Council failed to keep proper documented evidence of the resident’s statutory care needs between 2020 and 2025.
• The watchdog ordered the council to repay the full £75,000 to the late resident’s estate, alongside a formal apology to her family.
• The findings highlight systemic record-keeping and administrative failures within the local authority’s adult social care department.

Croydon (South London News) August 19, 2026 — As reported by Harrison Galliven of MyLondon, Croydon Council has been ordered by the Local Government and Social Care Ombudsman to repay £75,000 to the estate of a deceased resident after erroneously forcing her family to sell her home to cover care charges that should have been provided entirely free of charge.

Why Was the Family Forced to Sell the House?

The financial burden fell upon the grieving family after Croydon Council failed to acknowledge the late resident’s statutory entitlement to free aftercare following a period of compulsory detention for mental health treatment.

Under Section 117 of the Mental Health Act 1983, local social services authorities and health bodies have a joint legal duty to provide free aftercare services to individuals who have been detained under specific provisions of the Act. The explicit purpose of this provision is to prevent a deterioration in the person’s mental condition and lower the likelihood of readmission to hospital.

Despite these clear statutory requirements, the council mismanaged the case, wrongly categorising the resident as liable for social care fees. As care costs mounted, the family was left with no option but to liquidate the grandmother’s primary asset—her home—to pay off the mounting, miscalculated fees demanded by the local authority.

What Did the Local Government Ombudsman Investigation Reveal?

According to details outlined in the official decision published on 29 June, the watchdog upheld the family’s complaint following a thorough inquiry into the local authority’s handling of the file.

The Ombudsman severely criticized Croydon Council for its complete lack of documented evidence regarding the late grandmother’s statutory care needs covering the period between 2020 and 2025.

As recorded in the Ombudsman’s findings reported by MyLondon, council officers failed to complete, preserve, or properly review administrative records that would have verified the resident’s ongoing eligibility for free care. This critical record-keeping failure directly resulted in improper billing over a prolonged five-year period.

The Ombudsman determined that Croydon Council breached its legal duties and caused significant financial loss and injustice to the resident and her family. Consequently, the watchdog instructed the council to repay the entirety of the £75,000 wrongly levied against the late resident, payable directly to her estate.

How Has Croydon Council Responded to the Watchdog’s Ruling?

Following the publication of the Ombudsman’s ruling, Croydon Council accepted the findings and committed to complying fully with the remedies ordered by the watchdog.

In addition to reimbursing the £75,000, the local authority was instructed to issue a formal letter of apology to the surviving family members for the financial strain, distressed communications, and administrative failures experienced during an already difficult period preceding the resident’s death.

The ruling adds further scrutiny to the operational governance within Croydon Council’s adult social care sector, exposing vulnerability in how statutory Section 117 duties are logged, tracked, and audited across multi-year periods.

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What Is the Background of Croydon Council’s Care Fee Handling and Financial Crisis?

This ruling occurs against a backdrop of broader organizational and financial turbulence within Croydon Council. Over recent years, the south London borough has faced severe budgetary distress, having issued multiple Section 114 notices declaring functional insolvency since late 2020.

The local authority has been under intense national scrutiny regarding its internal auditing, financial governance, and operational efficiency across municipal departments.

Under Section 117 of the Mental Health Act 1983, local authorities and Integrated Care Boards (ICBs) share joint responsibility for funding and delivering community support services to qualifying individuals. Statutory national rules explicitly state that care provided under Section 117 cannot be means-tested or charged to the service user, regardless of their personal financial assets or property ownership.

The legal precedent established in R v Manchester City Council ex parte Stennett [2002] firmly cemented that charging for Section 117 services is illegal.

Despite explicit national guidelines issued jointly by the Parliamentary and Health Service Ombudsman and the Local Government and Social Care Ombudsman, local authorities across England periodically face legal challenges over administrative oversights where Section 117 clients are improperly transferred onto standard, chargeable social care packages.

In the case of Croydon Council, the total lack of documented assessments between 2020 and 2025 meant that standard residential care charges were levied unchecked until the family escalated their grievance to the independent watchdog.

What Does This Development Mean for Care Users, Families, and Local Authorities?

This decision carries direct ramifications for families navigating the adult social care system, local council finance departments, and legal advocates across the United Kingdom.

The ruling offers a crucial precedent for families who believe their relatives have been incorrectly charged for community care or residential placement following hospital discharge under the Mental Health Act.

It underscores the legal protection surrounding Section 117 entitlement and demonstrates that financial choices forced upon families—such as selling property to fund care—can be successfully challenged and reimbursed even after the care recipient has passed away. Families dealing with local authority care demands gain a clearer basis to request full documentation and historic care assessments to verify that statutory exemptions were properly applied.

For local authorities nationwide, particularly those operating under tight financial constraints, the Ombudsman’s order serves as a sharp reminder of the strict liability attached to Section 117 duties. Fines, full reimbursements, and public reprimands highlight that administrative oversights or poor record-keeping cannot be used to justify illegal fee collection.

Council social care departments are likely to face increased pressure to perform internal reviews on long-term care cases to identify and rectify charging errors before independent ombudsman investigations are triggered.