Retirement homes have been put on notice after being accused of exploiting older Australians through “corporatised elder abuse”.

Federal Financial Services Minister Stephen Jones says he wants to stamp out bad behavior by retirement village operators after an ABC investigation found “legalized financial abuse of older people” was widespread.

The ABC has received hundreds of messages from retired villagers and their families.

They reported huge repossession fees and huge costs of rehabilitating and renovating villas for sale and complained that the village government was left in the dark in the multibillion-dollar sector.

They have painted a picture of a power imbalance in favor of the operators, which current laws cannot contain.

Mr Jones said he was meeting state and territory consumer ministers in December and would put tougher regulation of the sector on the agenda.

“I have put this issue on the agenda of an upcoming meeting of consumer ministers and made it clear to state and territory ministers that this behavior must be stopped.”

“We will examine the best path forward in consultation with the states. We want all Australians to retire with dignity.”

But independent South Australian MP Rebekha Sharkie, who has been pushing Mr Jones to crack down on the sector for 18 months, said action was needed now and called for a parliamentary inquiry.

She described the contracts and fees as corporatized elder abuse.

“The residents of the retirement village have been waiting for years, so we need urgent action and not just an agenda item that is postponed again,” she said.

Current laws do not protect retirees

Currently, retirement villages are regulated by state and territory authorities, having been removed from Commonwealth jurisdiction in the mid-1980s. This results in different rules in different places.

Consumer advocates say current laws are failing to protect retirees and that more needs to be done.

“The shocking mistreatment of Maurine Moore in her retirement village is an example of widespread and systemic problems in retirement villages caused by a lack of adequate consumer protection and regulation,” said Fiona York, executive director of the Housing for the Aged Action Group.

The 90-year-old was living in a Pinnacle Living retirement village in Melbourne and was left with $343,000 after the retirement village deducted more than $100,000 in fees, which was less than the $490,000 she paid for it in 2009 had while she lived in the suburb increased by 150 percent.

Months after the agreement, the operator put its property on the market for $1.1 million.

Pinnacle has denied any wrongdoing.

Ms York welcomed the meeting of states but said it was important to ensure uniform protection for residents.

She said the sector needs an industry ombudsman, something the Consumer Action Law Center (CALC) is also calling for.

Stephen Nowicki, director of legal practice at CALC, called exit fees a particular concern. He said contracts are too complex and CALC has advocated for standardized contracts across the industry.

NSW recently adjusted its retirement home laws, and new laws are in the works in several other states, including South Australia and Victoria.

But the reform push in Victoria has been stalled for years, and neither the new law there nor the one proposed in South Africa addresses exit fees, which can cost retirees and their families hundreds of thousands of dollars.

The onerous fees can also leave older Australians unable to afford a place in aged care, forcing them onto a waiting list for a taxpayer-subsidized place.

Ensuring that “all residents of the retirement village can enjoy life in retirement, not just the lucky few”

Ms Sharkie has called for retirement home contracts to be regulated as financial products, which would subject them to scrutiny by the Australian Securities and Investments Commission.

She told the ABC that at the very least state and territory laws needed to be harmonized to a higher level.

“Due consideration should be given to treating the interests of retirement homes as financial products, with the associated strict control mechanisms and regulation by ASIC,” she said.

“The aim would be to improve national coherence, transparency and, above all, consumer protection so that all residents of the retirement village can enjoy life in retirement, not just the lucky few.”

The industry’s peak body, the Retirement Living Council, wants its code of conduct to become binding. It denied there were any systemic problems. It said only 55 complaints were received by the NSW Civil and Administrative Tribunal in 2023.

Less than half of Australia’s retirement home operators are currently signed up to the code, which does not provide for financial penalties and has had no recorded breaches since it came into force in 2020.

The code is due to be reviewed next year, and its administrator, Elizabeth Lanyon, said she would like to name the companies complained about and publish the results of investigations into violations.

She said state-by-state reform of the law risked “seven different codes,” pointing to a mandatory NSW code that came into force in 2020 and saying a national approach was needed.

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Margaret Hawkins, president of the South Australian Retirement Villages Residents Association, said the industry needed a national ombudsman after successive governments failed to stop blatantly legalized financial abuse of older people.

“Some of the operators think everyone in these villages is old farts,” she said.

Ms Hawkins described some of the fees as “astronomical”.

She called on the government to introduce a cap on redemption fees and renovation costs.

“The sad reality is that politicians do not understand retirement villages or what is happening in this area. They think they understand it, but they don’t understand it.”

In one case investigated by ABC, the deferred management fee reached 60 percent of the amount received upon resale of the villa.

“There remains no legal limit on the inclusion of deferred management fees in seniors accommodation service contracts in Victoria and there is a lack of measures to improve consumer rights to address known issues.”

NSW is reviewing retirement home regulation

NSW Fair Trading Minister Anoulack Chanthivong said the questions raised by the ABC investigation were “concerning”.

“The New South Wales government is currently reviewing the regulation of retirement villages,” he said.

The review, which will consider tightening disclosure rules, is expected to produce a report next year.

A South Australian government spokesman said a reform bill is currently before parliament that would make contracts clearer, limit increases in some fees to the rate of inflation and ensure residents whose units are not sold quickly after they leave are paid within a year instead of the current 18 months.

“We are aware that some residents have signed contracts and entered retirement homes that may have contained contract terms and exit calculations that may not have been clear and transparent at the time of signing,” the spokesperson said.

“That’s why we are strengthening legislation to improve consumer protections and mandate greater contract transparency to ensure future residents can make informed decisions when entering retirement villages.”

The Victorian government said it plans to bring its long-awaited legislation to overhaul the sector to Parliament later this year.

Queensland Housing Minister Meaghan Scanlon said the state had “already implemented significant legislative reform to improve transparency for pensioners”.

“If an investigation finds misconduct, I expect appropriate action to be taken, and if improvements can be made to achieve greater national consistency, I am happy to look at them.”

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