I'm afraid as others have said the council can commission whoever to provide care to meet eligible needs and there are many reasons this might need to change.
A direct payment would allow you to choose a provider yourself.
It doesn't really have anything to do with the Mental capacity act because they are commissioning the service. If someone lacked the capacity to get a direct payment then it would be a different case and the decision about whether they should have a direct payment, and what service should be provided would all be done in their best interests.
Also in regards to the Care Act, see below:
https://www.gov.uk/government/publi...-guidance/care-and-support-statutory-guidance
"13.5 In many cases, the review and revision of the plan should be intrinsically linked; it should not be possible to decide whether to revise a plan without a thorough review to ascertain if a revision is necessary, and in the best interests of the person. In addition, where a review is being undertaken where a person has a carer, the local authority should consider whether the carer’s support plan requires reviewing, too.
13.6 However, there are occasions when a change to a plan is required but there has been no change in the levels of need (for example, a carer may change the times when they are available to support). In addition, there can be small changes in need, at times temporary, which can be accommodated within the established personal budget."
So any decision ought to be in someone's best interests, but this is pretty easy to skirt around unfortunately and could be justified for a number of reasons, especially if their service is staying at the same level, just with a different provider.
Although even if their budget had been cut, the courts have recently taken the side of the council in the first Care Act related case.
http://www.communitycare.co.uk/2017/09/01/disabled-man-loses-appeal-care-package-cut/