In Western Australia the state’s watchdog, Consumer Protection, has set up a special investigation unit to examine contracts and exit fees in the scandal-ridden retirement village sector to see if they breach the Australian Consumer Law, the Sydney Morning Herald reports.
It is the latest in a long line of state regulatory bodies and governments scrambling to clean up a sector that has been crying out for reform for decades.
The heightened activity ahead of a meeting scheduled by the federal and state consumer affairs ministers to discuss the effectiveness of legislation and enforcement arrangements that cover the retirement village industry.
It follows a joint Fairfax Media and Four Corners investigation that exposed unfair practices in the sector including complex and opaque contracts, excessive fees, high-pressure sales tactics, punitive exit fees and outlandish refurbishment and reinstatement costs of up to $60,000 on a small one or two-bedroom unit, all of which have turned retirement village living into a financial sinkhole for some.
While retirement villages are regulated by state legislation, their contracts are subject to Australian Consumer Law, which prohibits unfair contract terms and is federal legislation.
As a rule, state governments don’t like relinquishing power to their federal counterparts. But there is a strong case to do just that in this case..
A parliamentary report in 2007, Older People and the Law, recommended the ACCC play a stronger role in monitoring consumer protection of retirement village residents. It said “should there be insufficient improvement in the level of protection for consumers, the Australian government should consider regulating this industry using its powers under corporations legislation”.
The retirement village sector is big business. It is also falling through the cracks. While the states continue to play politics, unscrupulous operators will continue to flourish from a business model that has been designed to “bleed them dry until they die”.
States scurry to reform retirement villages and ward off federal intervention (Sydney Morning Herald)