Care company fined for running illegal children's homes in legal first

Key facts

Company: Catalyst Care Limited
Location of homes: Kent
Period of operation: 2022-2025
Total fine: £92,400
Victim surcharges: £2,960
Costs: £17,250

Background

Catalyst Care Limited, based in Croydon, has been prosecuted and fined for running illegal children's homes in what Ofsted calls the first case of its kind. The company operated three homes in Kent between 2022 and 2025, accommodating up to nine children, and received over £1.7 million in payments from local authorities during that period.

All children's homes in England must register with Ofsted, and managing a home without registration is a criminal offence. Ofsted said it repeatedly warned the directors that they were breaking the law, but the homes continued to operate unregistered.

Current situation

Directors Miriam Ekhator and Davidson Lynch-Shyllon pleaded guilty at Croydon Magistrates' Court to failing to register children's homes. They were fined a total of £92,400, ordered to pay victim surcharges totalling £2,960, and costs of £17,250. They were also disqualified from carrying on, managing, or having a financial interest in a children's home.

During sentencing on Tuesday, Judge Sushil Kumar said it was of 'great concern' that the defendants failed to register the homes despite receiving multiple warning letters. Daisy Wrigley, for Ofsted, told the court the number of unregistered children's homes in the UK was not known, which 'highlights the importance of registering'.

Financial penalties imposed
Item	Amount
Fine	£92,400
Victim surcharges	£2,960
Costs	£17,250

All amounts as reported by the source.

Impacts

The prosecution highlights the risks of unregistered children's homes, which operate without oversight. Ofsted says in such homes there are no guaranteed checks on staff or living conditions, and there is no accountability when things go wrong. Children placed there have no assurance of 'safe or suitable care'.

The lack of available places in legitimate settings has led to a shadow market of illegal care homes. Ofsted estimates there are around 900 illegal children's homes operating in England. A 2024 report by the Children's Commissioner for England found that, at any one time, hundreds of vulnerable children were placed in unregistered homes for an average of six months each.

Councils say they are often forced to turn to unregistered children's homes because there are not enough registered homes in the right locations or homes willing to take children with very complex needs. Ofsted has promised to penalise councils using illegal children's homes.

Future outlook

Scenario analysis: The possibilities below are not certain predictions.

Ofsted said increased funding will help them identify and investigate unregistered providers, and new powers granted through the Children's Wellbeing and Schools Act will allow them to issue fines. The regulator is also consulting on proposals to downgrade local authorities that commission these illegal homes.

If these measures are implemented effectively, they could reduce the number of illegal homes and improve oversight. However, if the shortage of registered places persists, councils may continue to rely on unregistered providers, and the shadow market could remain.

Josh MacAlister, children and families minister, called the prosecution a 'welcome start to our wider crackdown'. Children's Commissioner Dame Rachel de Souza said she hopes it represents 'the beginning of the end for the scandal of illegal providers who put profit above the safety of vulnerable children'.

Source: bbc.co.uk

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