Special investigation unit to review retirement village contracts

Consumer Protection will conduct specific investigations into retirement village complaints, particularly relating to contracts being offered by operators in WA, to ensure that the rights of retirees are being protected.

The special investigation unit of senior investigators and lawyers will expand the Department’s ongoing proactive compliance program which has resulted in recent improvements in the corporate governance of two retirement villages.

In one case, the village’s board of management stood down and was replaced with a new board that had the necessary expertise and business acumen to change the management and operations of the village to make it more financially viable and protect the interests of residents.

Acting Commissioner for Consumer Protection David Hillyard said that this work is an important part of effective regulation of the industry, but acknowledges that more can be done.

“We recognise some of the public disquiet that has arisen about certain aspects of the industry so this special investigation unit will examine various contracts being offered by retirement village operators to see if any of those agreements breach the “unfair contract terms” provisions of the Australian Consumer Law (ACL),” Mr Hillyard said.

“These provisions relate to standard form contracts which may put retirees at a financial disadvantage and apply where there is a significant imbalance between the rights and obligations of the consumer and those of the operator.”

In the 2016-17 financial year, the Seniors’ Housing Advisory Centre received more than 500 enquiries relating to retirement villages and Consumer Protection investigated 33 complaints, mostly concerning contract disputes and the fees being charged by operators.

Mr Hillyard said retirement village contracts can be complex and daunting for many seniors and their families.

“We have asked these investigators to focus on contracts that are complex and residents may not be fully aware of the fees and charges which are both ongoing and also payable when they vacate the village. Sometimes the huge amounts payable can catch the residents or their families by surprise.

“One of the key investigations being undertaken will focus on the ‘deferred management fees’, also called ‘deferred residency fees’ or ‘facility fees’, which are often payable when the resident vacates their unit. They will look at how clearly these exit fees are outlined in the residents’ pre-contract documents and whether these clauses in the contracts pass the fairness test under the ACL.

“Recent amendments to the Retirement Villages Act have brought about the provision of information that enables potential residents to make meaningful comparisons between villages and provides realistic estimates of how much a resident will pay when they leave the village.

“These estimates at one, two, five and ten years give a meaningful perspective to the costs they may face.  But these laws are not retrospective and those residents who are already in a contract may not be aware of the costs they may face.

“The law changes now require full disclosure by operators, meaning all relevant information must be provided to potential residents at least 10 working days before they sign a contract. There is also a seven day cooling off period so those who have signed contracts can cancel it if they change their mind within that time.

“We want to ensure that the contracts being offered in WA balance the rights and obligations of both residents and operators and don’t put an unreasonable financial burden on those who can least afford it.

“While there are separate laws regulating the retirement village industry, operators are also obliged to comply with the ACL so their contracts need to be fair, balanced and reasonable.”

Free independent advice on retirement living is available from the Seniors’ Housing Advisory Centre via the Consumer Protection website www.dmirs.wa.gov.au/consumer-protection or enquiries can be made by email seniorshousing@dmirs.wa.gov.au or by calling 1300 367 057.


Media Contact: Alan Hynd, (08) 6552 9248 / 0429 078 791 / alan.hynd@dmirs.wa.gov.au  

Consumer Protection
Media release
20 Jul 2017

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