Care home chains face extra regulation Southern Cross was the biggest company in the care homes sector before it collapsed last year. Photograph: Tim Ireland/PA Leading care home chains and providers of care for people in their own homes are to face new controls in the wake of the collapse of Southern Cross, the biggest company in the sector. Ministers plan to introduce an extra system of regulation for larger care providers to improve early warning of businesses running into trouble and to ensure contingency plans are in place if they cease to trade. The "central oversight regime" will require companies to file regular reports on their financial health and borrowings. If the figures exceed set limits, a business will be declared to be in "distress" and a contingency plan enacted. Most care sector leaders welcomed the plans. But care companies were more guarded and are likely to oppose the regulatory role being given to the Care Quality Commission, one of two options on the table. Southern Cross collapsed last year after it ran out of money to pay the landlords who owned most of its 752 homes. The Department of Health, local councils and social care leaders had to mount an emergency operation to ensure none of the homes' 30,000 residents were left without accommodation. Almost all the company's homes were taken over by other providers, but ministers fear that might not happen again in the event of another crisis. First details of the new regulatory regime emerged at the annual National Children and Adult Services conference in Eastbourne. Health department officials said the Southern Cross affair had exposed a gap in checks on private companies and charities, which together now account in England for 91% of residential care and 84% of care at home. William Vineall, the department's deputy director for social care policy and legislation, said: "As government, there was not a mechanism in place that we could call on to handle this process." Plans for the regime will be issued for consultation before the end of the year. Final proposals are expected to be agreed by next spring and will be included in the forthcoming care and support bill. The regime will be designed to be "light touch," avoiding unnecessary red tape, and will be limited to larger providers - although some smaller companies that are dominant in certain regions or deliver specialist care are likely to be included. Rachel Armstrong, the department's policy manager for social care markets, said: "There are greater risks in ensuring continuity of care for individuals receiving services from the largest providers simply because it is far more difficult to do so." The officials ruled out creating a new regulatory body to run the system and said it would come under either the CQC, which checks on care quality, or Monitor, the NHS trust regulator, which will have a greatly expanded role under the government's NHS shakeup The CQC has been unpopular with many care providers, who have to pay to register with it and to undergo quality inspections. It has been involved in a number of controversies over its effectiveness. Michael Rumsby, policy officer of the English Community Care Association, which represents the leading private care companies, said: "We appreciate the concern that the department has about very large providers, but it remains to be seen whether a regulator could competently achieve what they want." Peter Hay, director of adult social care in Birmingham, said the plans were a great step forward on a vital issue. "I think the movement is huge and very welcome," he said.