The legislation update comes after three years of extensive consultation from the State Government with the aim of striking a balance between the needs of residents and operators.
An Office for the Ageing spokesperson says since the implementation of the current legislation in 1987, a lot in the retirement industry has changed and that there has been “strong concern” among the community and evidence that the current Act does not provide adequate consumer protection.
“The new Act reflects modern retirement villages practice and the evolving needs of an aging population…. [the] legislation will increase consumer protection, clarify current provisions and encourage best practice,” the spokesperson says.
“It aims to reduce disputes within the industry, and to ensure an overall balance is achieved between the rights of residents and the interests of operators.”
The spokesperson adds that these reforms to the Retirement Villages Act have been made to provide greater transparency, certainty and improved protections to current and future residents of South Australian retirement villages.
“It will have a positive impact on prospective retirement village residents by providing improved disclosure about the terms of retirement village residence agreements and ensure prospective residents are clear about the terms to which they are agreeing,” they say.
“It also provides greater clarity for both operators and residents as to their rights and responsibilities.
“With enhanced and strengthened provisions, the new Act will provide residents with flexibility and better oversight of their financial investment.”
Existing residents will be able to rely on the terms of their existing agreements, however should become familiar with the new provisions which are:
- A guaranteed ‘buy-back’ at 18 months is the residence is not on-sold before that time has been introduced, providing a greater level of certainty around the timeframe in which a resident or their estate will be repaid an exit entitlement
- Residents wishing to leave a retirement village but can’t afford to until the residence is on-sold can remain in-situ until relicensing occurs, allowing more flexibility to empower people to make plans to be closer to loved ones
- Early repayment provisions to assist those residents entering into aged care are updated
- Greater disclosure and transparency of residence contracts is now provided along with the introduction of a standard disclosure statement, summarising all fees and charges of entering and leaving a village which increases contractual term awareness and responsibilities to allow residents to choose a village that best suits them
- Auditing requirements have been improved for responsible management of residents’ funds, improving transparency of financial reporting
- The introduction of provisions on what occurs when a surplus or deficit in a village recurrent fees, requiring villages to adopt a surplus or deficit policy
- Increased penalties to deter contravention of the Act with penalties ranging from $750 to $35,000
The introduction of a disclosure statement will also aim to draw attention of prospective residents to the fees and charges within the contract and assist them to make an informed decision.
Local consumer peak body Council on the Ageing (COTA) SA has welcomed the changes to the legislation with Chief Executive Officer Jane Mussared saying that it will strike a better balance between consumers and retirement living providers.
"There are some important and very welcome changes to the Retirement Villages Act, which comes into force January 2018," she says.
"We think it strikes a much better balance between the commercial requirements of village operators and the rights of village residents."
Ms Mussared says the peak body also welcomes the statutory repayment provision that provides for residents leaving a village to be paid out for their unit after 18 months whether or not it has been relicensed. Adding that is has been a "major sticking point" for residents, with some waiting years before having access to their investment.
"The Bill also enables residents to continue to occupy their unit while it is being relicensed," she says.
"At the moment residents are required to move out even though the unit may be vacant.
"The Bill and draft Regulations also provide new levels of transparency in contracting and day to day management.
"This is the first time Retirement Villages Regulations have attempted to codify the behaviour required of residents and operators - it is designed to be a protection for all but will only have value if it is enforceable.
"To that end, we are pleased to see the opportunity for what is effectively and 'on the spot' fine'."
Another important emphasis of the new Regulations according to Ms Mussared is the transparency of contracting - with the draft Regulations prescribing this and providing opportunities for breaches to be penalised through an 'expiation fee'.
Office for the Ageing has already held a number of information sessions and a series of information sheets will be available online.