Ofsted Wins First Prosecution Of Illegal Children’s Home Provider

Ofsted has successfully prosecuted Catalyst Care Limited and its directors for operating three children’s homes without registration, resulting in the company and its two directors being fined £92,400. They were also ordered to pay victim surcharges of £2,960 and costs of £17,250. The two directors have additionally been disqualified from carrying on, managing, or having a financial interest in, a children’s home.

Case summary

The Care Standards Act 2000 requires any person who carries on or manages a children’s home to be registered with Ofsted. Any person who carries on or manages a children’s home without registering with Ofsted commits a criminal offence.

Catalyst Care Limited was operating three children’s homes in Kent which were not registered with Ofsted.

Ofsted says it repeatedly warned Catalyst Care Limited and its directors that they were committing a criminal offence, and that during this time the three homes received over £1.7m in payments from local authorities placing children in the homes. This reportedly covered the period from October 2022 to April 2025, during which time accommodation was provided to nine children.

Both Catalyst Care Limited and its two directors pleaded guilty to all charges.

Ofsted’s new powers

Despite Ofsted trying to tackle provision of unregistered children’s homes for many years, the case against Catalyst Care Limited is its first successful prosecution. This is surprising when considering Ofsted’s most recent data (from 2024) sets out that there are over 900 unregistered children’s homes, up from 300 in 2022/2023, and that only 6% of those who were sent a warning letter about this applied for registration.

To try to address this, Ofsted has recently been given new powers under the Children’s Wellbeing and Schools Act 2026, the provisions of which are being brought into force in stages. Under this Act, Ofsted has been granted powers to issue civil fines against any person operating or managing a children’s home without registration, if it is satisfied beyond reasonable doubt that an offence has been committed.

The criminal offence remains, but these new powers will widen Ofsted’s ability to take enforcement action against those who carry on or manage unregistered children’s homes.

Regulations will set out the procedure for the imposition of such fines, and Ofsted will need to publish an enforcement policy setting out its approach, but the imposition of civil fines will no doubt be quicker and easier than criminal enforcement action. Ofsted also has funding for a new team for unregistered investigative work which it says will mean they have more capacity to carry out investigations, along with legal and policy support.

We therefore expect Ofsted will seek to make swift use of these new powers and will increase its regulatory enforcement action against unregistered providers, with criminal enforcement action reserved for the most serious cases.

Impact on providers

Whilst further guidance on the approach to these civil fines is awaited, in other regulatory regimes, a civil fine often requires acceptance that an offence has been committed. Such a fine can therefore have wide ranging implications, for example on the history of regulatory compliance, commissioning relationships, insurance, procurement and reputation.

Whilst some providers will operate children’s homes without registration knowingly, that is not the case for all providers. For example, it is not always clear whether a provider falls within the definition of a ‘children’s home’, or registration with Ofsted. Given that registration applications can take many months to be approved, local authorities may ask a provider to accept a child before registration has been granted because of an urgent placement need.

Local authority impact and Ofsted’s consultation

The cause of unregistered children’s homes is complex but one reason placements into unregistered homes can arise is because there are no registered placements available to local authorities.

Ofsted wishes to place some responsibility on local authorities for these placements and is currently consulting on changes to children’s services.

One of the proposals is to limit a local authorities’ evaluation under the ‘Inspecting Local Authority Children’s Services’ (ILACS) framework if they place children in unregistered homes. The proposal is to limit the evaluation area ‘impact of leaders’ as not meeting the expected standard, to be graded as either ‘needs attention’ or ‘urgent improvement’, depending on the circumstances.

Both providers and local authorities should ensure they are aware of, and plan for, these changes.