Lincolnshire County Council has agreed to refund some people it charged for short-term residential care following an investigation by the Local Government and Social Care Ombudsman (LGSCO).
The Ombudsman's investigation found the council had been charging a fixed fee for respite care without assessing whether people could afford it, which led to around 1,400 people overpaying.
This is not in line with statutory guidance which emphasises the principle that a charge should be affordable for the individual, the LGSCO said.
The policy criticised by the Ombudsman saw a different flat rate charged for the care based on people's ages, but stated people could have a full financial assessment if they wished.
Lincolnshire told the Ombudsman it had identified 4,387 respite users who later went on to receive full-time residential care. Of that number, nearly 3,000 had either paid the correct charge or had underpaid. However, the rest had overpaid by between £10 and £50 per episode of respite care.
Although there was no individual complainant in this case, the Ombudsman used its powers to investigate whether other people may have been affected after the issue was uncovered as part of a previous investigation.
Michael King, Local Government and Social Care Ombudsman, said: "Although to some the amounts people overpaid may seem small, those people have still suffered a financial loss. These sums may have made a material difference to peoples' weekly income, so I welcome the council's acceptance of my recommendations to put things right for them."
In this case, the council has agreed to reimburse those people it has already identified as having overcharged; and identify and reimburse the remaining cases (for people who are still alive). If this is not possible, it will offer those people a retrospective financial assessment and calculate any refunds due.
Glen Garrod, Lincolnshire's Executive Director of Adult Care and Community Wellbeing, confirmed that the council accepted the Ombudsman's report.
Mr Garrod said: "[We] accept the findings and are acting on the recommendations laid out by the Ombudsman. We have apologised to those affected and reimbursed anyone who has been overcharged for short-term residential care, as well as reviewing our procedures so that similar problems don't happen again. It's always our aim to provide good quality support and services that our residents need and deserve."