Retirement village residents and their families have backed calls for tougher regulation of the sector, with one saying contracts should carry a cigarette-style financial health warning and another saying the industry is a “black hole”.
Speaking in Canberra on Wednesday, Leanne Gundry said she will have to move back to Perth and give up her consulting business in favour of a steady income job in order to help her mother pay for aged care after leaving a retirement village.
She backed calls by crossbench federal MP Rebekha Sharkie for a national overhaul of retirement village regulation and said resident contracts should be categorised as financial products, which would bring them under the regulatory oversight of the Australian Securities and Investments Commission.
Ms Sharkie renewed her calls for greater regulation on Wednesday after an ABC investigation into the sector found exit fees dictated by complex contracts were ripping hundreds of thousands of dollars out of the pockets of residents and their families.
She has been lobbying Financial Services Minister Stephen Jones for 18 months to hold an inquiry into the sector, harmonise regulation nationally at a higher standard and look at making contracts a financial product.
Ms Gundry called for greater transparency in retirement village contracts.
“Like you have ‘smoking’s dangerous for health’, you should have a financial health warning on any sort of a residential village contract,” Ms Gundry said.
“It should say: ‘Do you realise that on entry into this contract with a retirement village, you are either seriously damaging or destroying your chances of having the form of nursing home care that you desire and you’ve anticipated?'”
Daniel Gannon, the executive director of the lobby group for retirement village operators, the Retirement Living Council, previously told the ABC that the sector wanted simpler contracts and over the past five years had been working to slash their size, but admitted there was “a bit more work to do”.
“Some operators have reduced their contract sizes by up to 30 per cent,” he said.
“There is still way too much complexity in these contracts.”
Ms Gundry said that as recently as the end of June, her mother was fully mobile and living independently in a retirement village in Perth where she has lived for 24 years.
“As a result of a series of falls, last Monday I signed a contract for her to be in permanent nursing home care,” she said.
“She’s now immobile, unable to feed herself, and I am her only child.”
She said that through hard negotiations with the village operator she was able to claw back $35,000 — but this was wiped out by a price increase at the aged care facility.
“As it is, what she’s been able to afford is a shared room,” she said.
She said she was moving back to WA and taking a job with a steady income to cover the extra cost of getting her mother into a single room, “which I think all of us are entitled to — one room in our final stage of life”.
“I have negotiated professionally and for me to feel that I was completely wedged between a rock and a hard place when this happened to my own mother — it’s devastating. It’s devastating.”
The former president of the ACT Retirement Village Residents’ Association, John Beagle, said that “you could really call the retirement village industry a black hole” and called for a star rating system to compare villages.
“You cannot find out anything about comparative retirement villages anywhere in Australia,” he said.
John Beagle likened the retirement village industry to a “black hole” because of a lack of transparency. (ABC News)
Elizabeth Reid, a retirement village resident and former adviser to Gough Whitlam, said she chose where she lives based on its values.
She is a member of Canberra Vintage Reds, a group for retired trade unionists.
“I looked into the financial side, I mean I’ve spent all my life looking at budgets,” Dr Reid said.
“But it didn’t make sense to me, I didn’t realise what was involved in it.
“There’s a tremendous need for greater transparency in this sector, and greater accountability.”
Retirement village resident Elizabeth Reid wants to see greater accountability in the industry. (ABC News)
Following the ABC’s investigation, Mr Jones has placed the issue on the agenda for a meeting of federal, state and territory consumer affairs ministers in December, saying that “there clearly needs to be a significant improvement in the conduct of retirement village operators”.
Speaking in parliament on Wednesday, Ms Sharkie said regulation by the states resulted in a patchwork of rules that weren’t working.
“What we need is some federal oversight on retirement villages,” she said.
“We need an inquiry into this. I urge the minister — if you genuinely care about consumer issues you will take this on with gusto.”
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