Federal Financial Services Minister Stephen Jones says he wants to stamp out bad behaviour by retirement village operators following an ABC investigation that revealed “legalised financial abuse of the elderly” is rife.

The ABC has received hundreds of messages from retirement village residents and their families.

They have told of huge exit fees, mammoth costs to refurbish and renovate villas for sale and complained of being kept in the dark by village management in the multi-billion-dollar sector.

They have painted a picture of a power imbalance in favour of operators that current laws do not curb.

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 for an upcoming consumer ministers meeting and have made it clear to state and territory ministers this behaviour needs to be stamped out.

“We will consider the best pathway 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 corporatised elder abuse.

“Retirement village residents have been waiting years, so we need urgent action not just an agenda item that gets pushed back again,” she said.

Current laws not working to protect retirees

Currently, retirement villages are regulated by state and territory authorities after being carved out of the Commonwealth’s jurisdiction in the mid-1980s. This results in different rules in different places.

Consumer advocates say the current laws aren’t working to protect retirees and more needed 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 protections and regulation,” said Housing for the Aged Action Group executive officer Fiona York.

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, while houses in the same suburb rose 150 per cent. 

Months after settling, the operator put her property on the market for $1.1 million.

Pinnacle has denied any wrongdoing.

Ms York welcomed the meeting of the states but said it was important to have consistent protections for residents.

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

CALC’s director of legal practice Stephen Nowicki singled out exit fees as a particular problem. He said contracts were too complex and that CALC had advocated for standardised contracts across the industry.

NSW recently tweaked its retirement village laws, and new legislation is in the works in some other states including South Australia and Victoria.

But the reform push in Victoria has been stalled for years and neither its or SA’s proposed new laws deal with exit fees, which can rip hundreds of thousands of dollars from retirees and their families.

The crushing fees can also leave older Australians unable to fund a place in aged care, forcing them on to a waiting list for a taxpayer-subsidised spot.

Ensuring ‘all retirement village residents can enjoy retirement living, not just the lucky few’

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

She told the ABC that at a minimum state and territory laws needed to be harmonised at a higher standard.

“There should be due consideration of treating retirement village interests as financial products, with the strict checks and balances that entails, and regulation by ASIC,” she said.

“The aim would be to improve national consistency, transparency and above all, consumer protections, so that all retirement village residents can enjoy retirement living, not just the lucky few.”

The industry’s own peak body, the Retirement Living Council, wants its code of conduct made mandatory. It denied there were any systemic issues. It said there had been only 55 complaints in the NSW Civil and Administrative Tribunal in 2023.

Fewer than half of Australia’s retirement village operators are currently signed up to the code, which lacks financial penalties and hasn’t had a breach recorded against it since it began in 2020.

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

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 said a national approach was needed.

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President of the South Australian Retirement Villages Residents Association Margaret Hawkins said the industry needs a national ombudsman after the failings of successive governments to stop the obvious legalised financial abuse of elderly people.

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

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

She called on the government to introduce a cap on exit fees and refurbishment costs.

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

In one case looked at by the ABC, the deferred management fee reached 60 per cent of the amount reaped when the villa was re-sold.

“There remains no legal restriction on including deferred management fees in service contracts for retirement housing in Victoria, and there has been a lack of action to improve consumer rights to address well known problems”.

NSW reviewing retirement village regulation

NSW Fair Trading Minister Anoulack Chanthivong said the issues raised in the ABC’s investigation were “concerning”.

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

The review, which is considering beefing up disclosure rules, is expected to report back next year.

A spokesperson for the South Australian government said a reform bill was currently before parliament that will make contracts clearer, cap increases in some fees at the inflation rate and see residents whose units don’t sell quickly after they leave paid within a year, rather than the current 18 months.

“We recognise some residents have signed contracts and entered retirement villages which may have included contract provisions and exit calculations that may not have been clear and transparent at the time of signing,” the spokesperson said.

“This is why we are strengthening the legislation to increase consumer protections and mandate greater contract transparency to ensure that future residents are able to make informed decisions when entering retirement villages.”

The Victorian government said it planned to put its long-anticipated laws to overhaul the sector before parliament later this year.

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

“If any investigation finds any wrongdoing I’d expect the appropriate action to be taken, and if there are any improvements that can be made to bring greater national consistency, I’m happy to look at them.”

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