News | Published March 02 2019

CQC encourage greater focus on corporate accountability

Guidance on rules of behaviour for directors of care provider companies has been updated by the Care Quality Commission, widening the scope of what may be judged as serious misconduct or mismanagement.

The regulator’s new focus means that parent companies could be held to account for failings at subsidiary levels within a company.

Misconduct by management is dealt with in Regulation 5 of the Health and Social Care Act. It could range from a director acting in breach of an employment contract to where a director breaches any regulatory requirements such as not adhering to mandatory health and safety rules.

The regulation says a provider must not appoint or have in place an individual as a director where the individual has been responsible for, been privy to, contributed to or facilitated any serious misconduct or mismanagement.

Under the new guidance, if the CQC considers Regulation 5 to have been breached, it will make a judgment as to whether the provider acted reasonably. The CQC may do this by reviewing whether a provider has carried out appropriate checks on directors and whether appropriate ongoing performance reviews had been undertaken – this may involve checking personnel files and appraisal documentation.

In addition to saying how it will deal with misconduct on the part of management, the regulator has also been more specific about what it considers to be “mismanagement”, where an individual responsible for the management of an organisation or part of an organisation, and where the decisions and actions of the directors’, falls below “any reasonable standard of competent management.”

The CQC outlines some examples of behaviour that may amount to mismanagement, such as ‘providing inaccurate information to a public authority without taking reasonable steps to ensure it was correct’ and ‘not sharing reports where appropriate, where findings may adversely affect the organisation.’

It is clear that Regulation 5 will now have a wider impact in scope and application than it previously did in terms of determining where a director may be deemed unfit. Although an isolated incident is unlikely to constitute serious mismanagement, an incident may be construed as serious mismanagement if it calls into question the confidence of the organisation and public in the individual concerned.

It is evident that the CQC wants more accountability from directors, and for care providers to have an appropriate system of information sharing between managers and the board, which in turn will provide greater corporate oversight.

The CQC has also changed how it defines a “provider” of care to ensure that they “hold the right people to account” for the quality of care provided, introducing criteria to ensure that the entity with the “direction and control” of care will be clearly listed in their register. This could lead to a different result from the former test of who has the management of the day-to-day delivery of care.

The CQC’s focus is now further up the corporate structure of larger providers, meaning that parent companies could be held to account for failings at subsidiary level. These changes have been tested by the CQC from April 2018 and go hand in hand with the proposal to introduce provider-level assessment and ratings for all sectors.

Authored by

The Parliamentary Review

March 02 2019

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