I have experience of this as a professional. Sadly its not uncommon for people with dementia to tell people that they are being held against their will and they do genuinely believe this, In most cases its because they really cannot cope at home and its the best choice of a sad and difficult bunch. People with dementia need 24/7 supervision as well as help with daily living activities and its rare indeed for a family to be able to cope with this unaided. Despite what people may think, nowadays its not at all easy for people to move their relatives into care against their will and assume control of their affairs.
However, just in case, there are two things that you could do. The first is to speak very very tactfully to the relative concerned, and if you are still unhappy then approach Social Services. SS probably won't be able to tell you anything because of client confidentiality but you can express your concerns to them.