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Retirement village residents often left in the dark over complex contracts

Leading seniors’ advocacy group, COTA Australia, is calling on the federal government to consider implementing a national regulatory system for retirement providers, in the wake of the Fairfax/Four Corners program on issues in the retirement village industry.

The retirement village operator Aveo was the focus of Four Corners last night after current and former residents shared their personal stories of complex contracts and confusing marketing.

Chief Executive of COTA Australia said that while most retirement village residents lead fulfilling lives, older Australians welfare too often slips through the cracks in the Commonwealth/State regulatory system, with inconsistent and inadequate laws confusing residents and families.

“While an overwhelming majority of retirement village (RV) residents are happy with their living arrangements, the Four Corners investigation highlights much more work needs to be done to reduce the complexity of contracts and fee structures, and explain them properly.

“RV contracts remain difficult to navigate, despite various attempts by state governments to legislate plain English summary disclosure.

“Contracts should be simplified and standardised which will allow for comparability and equip older Australians with more power and information to make a well-informed choice when selecting a provider.

“Far too many people become RV residents without fully understanding that it is not usually a real estate purchase and you don’t have the same controls you would have if you owned your own home.

“The most popular business model for RV operators in Australia is that of the Loan-License/Deferred Maintenance Fee, which is not intuitively understood by most people and too often poorly explained by operators. It is not even properly understood by many lawyers, accountants and financial advisers.

“We should not wait till the dust settles after last night’s report. Now is the time to reconsider a Commonwealth role, or at least standardisation of legislation across States through COAG.

Various inquiries over the years have looked at a Commonwealth role in RV regulation, starting with the 2007 inquiry and subsequent report ‘Older People and the Law’, which put forward a number of recommendations that were never implemented.

“RV contracts are not really about Real Estate…rather, they are a financial product whereby people have a licence to live in an RV unit, and there a myriad of financial and personal risks attached to this model.

“They should be subject to regulation by the Australian Securities and Investment Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC), not under-resourced and inappropriate State tenancy tribunals,” Mr Yates said.

“When it boils down to it, older Australians deserve the utmost clarity and consumer protection when they are choosing where and how they should live in the latter stages of their life.”

 Media contact: Ian Yates 0418 835 439, Bronte Kerr 0411 676 269

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3 Responses to Retirement village residents often left in the dark over complex contracts

  1. Les Whiteley says:

    recently there was a structured enquiry in Victoria but while it produced a list of recommendations, there is no agenda – that I aware of to look at those recommendations…. There was a meeting recently (jointly chaired by several bodies including cota) but it made no recommendations – despite a lot of complaint against Aveo who were reported as taking a somewhat arrogant response to the complaints.
    Seems some noise but no action is the likely response…..

  2. Hi Le,
    Thank you for writing to us. One of our team members will respond to you soon.
    Have a nice day!

  3. COTA Volunteer says:

    Hi Les, COTA Victoria has been very active in campaigning on Retirement Housing Reform in Victoria. The recent meeting with residents of retirement villages identified which recommendations from the Parliamentary Inquiry into Retirement Housing were most important to campaign on. These included: an independent Industry Ombudsman (or alternative dispute resolution body to deal with disputes); a full review of the Victorian Retirement Villages Act; reforms to address the complexity of contracts, unfair fees; accreditation and training of Retirement Villages staff. We distributed a campaign kit and discussed the role all residents and anyone concerned about the issues in retirement housing to write a letter to their local MP and request a meeting to express your concern. We are urging the government to support the report and act on most of the recommendations. We will keep our readers and members informed of any progress. The Victorian Government has until September to respond officially to the Inquiry. There is a lot of work being undertaken by COTA, Housing for the Aged Action Group and Consumer Action Law Centre. This is a priority for us.
    Thanks for your comment.