Guide to the Retirement Villages Bill 2015

Transcription

1 Guide to the Retirement Villages Bill 2015

2 page 2 Guide to the Retirement Villages Bill 2015

3 From the Hon Zoe Bettison MP, Minister for Ageing South Australia has a growing and diverse population of older people who enjoy a range of choices about where and how they live. Retirement villages are a unique and popular form of accommodation for seniors. They contribute to wellbeing of residents by providing secure and age-appropriate housing in communities which offer social connectedness and safety. It is not surprising then, that in South Australia we are seeing a growth in the number of retirement village residences, reflecting the increasing number of older people making the choice to live in them. Retirement village operators and residents are partners in the day to day experience of retirement village life, and since 1987 their respective interests have been addressed and regulated through the Retirement Villages Act As the retirement villages industry has evolved and changed over time, so too the Act has been amended. However, despite these amendments it is clear that the existing Act no longer provides adequate consumer protection a fact that impacts on current and potential residents and operators alike. On 20 May 2014 I tabled in Parliament a State Government response to the recommendations of the Select Committee on the Review of the Retirement Villages Act This response acknowledged the need for reforms to the Act based on a range of submissions from peak bodies, operators and retirement village residents. I am now proposing a new Retirement Villages Bill that incorporates the majority of the recommendations of the Select Committee. This will have the effect of clarifying the rights and responsibilities of operators and residents. It will enhance information disclosure requirements and provide tighter definitions. It will also implement improved consumer protections including statutory requirements for the repayment of exit entitlements. These legislative reforms are part of a package of broader measures aimed at ensuring the ongoing confidence and growth of the retirement villages industry. Other measures include the Better Practice Guidelines for operators launched in late 2014, and the establishment of an advocacy service for retirement village residents. I urge all persons and organisations with an interest in retirement villages to consider the Paper and invite your responses. Hon Zoe Bettison MP MINISTER FOR AGEING Guide to the Retirement Villages Bill 2015 page 3

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5 Table of Contents Background...6 A three element approach...7 Why a new Bill?...7 How to provide feedback General Amendments Objects of the Act Interpretation Definitions of the Act Changes applicable prior to occupation Contracts and Disclosure Statements Premises Condition Reports Ingoing Contribution (Premium) to be held in trust Amendments applicable while living in a village Residents committees and meetings Provision of minutes to residents and appointment of proxy Increases in recurrent charges Surplus and Deficit Consultation on the annual budget Charges for new residences Clarification of auditing standards Behaviour Rental tenants Amendments applicable to leaving a village Exit fees Rights relating to exit entitlement Valuation Termination of a resident s right to reside When a resident leaves to enter an aged care facility Dispute resolution and the Tribunal Dispute resolution The Tribunal Increased powers relating to offences and villages in financial difficulty Powers of investigation Expiable offences New offences Financial difficulty and mismanagement Liability of director or manager Frequently Asked Questions Resident Frequently Asked Questions Operator Frequently Asked Questions...22

6 Background In 2013 a Parliamentary Select Committee undertook a review of the current Retirement Villages Act 1987 (the Act). The Committee made significant recommendations aimed at addressing the needs of both residents and operators and ensuring that the Act appropriately reflects changes in the industry and contemporary society. The Government s response to the Select Committee s recommendations acknowledged the need for reforms to the Act based on a range of submissions made by peak bodies, operators and retirement village residents. In May 2014, the Government recommended the majority of the Select Committee s recommendations be introduced and noted several areas merited further investigation or the introduction of broader measures. The emerging complexities within the industry, its continuing growth, the Select Committee s recommendations and observations from the Office for the Ageing (OFTA), indicated the need for balance to be maintained between the rights of residents and the interest of operators. The key themes that evolved out of consultation undertaken with industry and residents were: lack of continuity of practices and standards within retirement villages; a need for further support for residents to voice their concerns through an advocacy service; and to maintain legislation that provides for the ongoing viability of the industry whilst at the same time ensuring the protection of residents. It is through these key themes that the Government has developed its approach. page 6 Guide to the Retirement Villages Bill 2015

7 A three element approach The Government response to the Select Committee s recommendations and consultation with key stakeholders comprises of three elements; providing increased support to residents, encouraging better practice within the industry and the introduction of the Retirement Villages Bill 2015 (the Bill). These measures sit within a broader, cohesive approach to ensure a continuing balance is achieved between the interests of operators and the protection of residents. An advocacy service for residents of retirement villages was established in late 2014 as part of the Government s response, through the Aged Rights Advocacy Service. The service provides personal support, assistance or representation to a resident when meeting with an operator, other professionals or attending the Tribunal. It also helps residents understand their rights and responsibilities in relation to their occupancy as a retirement village resident. The second element involved the creation and publication of Better Practice Guidelines which promotes best practice amongst retirement village operators. The guidelines were developed in consultation with stakeholders including industry and resident representatives and released in late The final element incorporates the Select Committee s recommendations and key stakeholder consultation resulting in the creation of the Bill. The Bill includes substantial changes that will have a wide range of impacts benefiting both operators and residents of retirement villages. The Bill aims to reflect the changes in contemporary society whilst noting the need to maintain flexibility within current business processes, support variation of schemes within the industry and the ongoing needs of an ageing population. Why a new Retirement Villages Bill? Since the original Act was implemented in 1987, the industry has evolved significantly and there is both strong concern amongst the community and evidence that the current Act does not provide adequate consumer protections. The Act needs to reflect the needs of our ageing population and to support sustainable growth in the retirement village industry. A significant number of amendments have been made since it came into operation, and has led the Government to approve the introduction of the Retirement Villages Bill This will result in a cleaner and more streamlined piece of legislation that will be more easily understood and implemented. Guide to the Retirement Villages Bill 2015 page 7

8 How to provide feedback There are a number of ways to learn more about the Bill and provide feedback. For more information about the changes, planned public forums and to access the reference documents, please visit: or via YourSAy at: All submissions must be in writing; a feedback form has been developed and can be submitted in the following ways: Online Survey provide your formal feedback by completing the online survey: provide your formal feedback via to: Health.RVActReview@health.sa.gov.au Post Retirement Villages Review, Office for the Ageing, PO Box 196, Rundle Mall, Adelaide SA 5001 Feedback closes at 5pm Friday 24 April Late submissions will not be considered. If you have any questions about providing feedback please contact Office for the Ageing on page 8 Guide to the Retirement Villages Bill 2015

9 1. General amendments 1.1 Objects of the Act Clause 3 The Bill contains the following amended objects of the Act: > > to encourage best practice management standards among the operators and managers of retirement villages; > > to ensure that there is proper disclosure of information to prospective residents of retirement villages; > > to regulate the making, content, operation and termination of residence contracts; > > to provide for proper consultation between residents and operators and managers of retirement villages; > > to provide for dispute resolution processes. These additions seek to strengthen the objects of the Act, make the purpose of the Act clearer and to reinforce its principles. Guide to the Retirement Villages Bill 2015 page 9

10 1.2 Interpretation Definitions of the Act Clause 4 A number of changes have been proposed for this section to improve clarity and consistency in retirement villages. These changes are: > > The age limit of 55 for entry into a retirement village will remain, however, the Bill removes the requirement to be retired and residents will be able to continue to work while in occupation of a retirement village. This amendment will allow residents to continue to work whilst in occupation of a retirement village. This change will allow operators to develop varying types of village models and enable residents to transition into retirement. > > The definition of administering authority has been replaced with separate definitions of operator and manager to improve clarity. > > The term premium has been replaced with ingoing contribution to reflect a more accurate description of the payment. > > The Bill defines a special levy as a single amount that residents of a retirement village are required to pay to cover an unforeseen operating expense of the retirement village not provided for in the recurrent charges. This will provide a definition of a special levy and reduce confusion among residents and operators. > > The period of occupation is defined as beginning from the day a resident enters occupation of the residence and concluding on the day which the resident ceases to reside in the residence. > > A resident will cease to reside in a residence when vacant possession has been provided. The Bill defines vacant possession as occurring when the residential premises returned to the operator is cleared of personal possessions and the key is returned to the owner/operator. > > A definition of exit entitlement has been included as the amount to be paid to a former resident under a contract arising from the resident ceasing to reside in the village or the settlement of the sale of the right to reside in the residence. > > Exit fees have been defined to mean the amount a resident may be liable to pay under a residence contract arising from the resident ceasing to reside in a village or on the sale of the right to reside in the residence. page 10 Guide to the Retirement Villages Bill 2015

11 2. Changes applicable prior to occupation 2.1 Contracts and Disclosure Statements Clause 19 Retirement village contracts can be complex and there is a need for greater contractual disclosure prior to entering a retirement village. To ensure that potential residents better understand their contracts it is proposed a disclosure statement is introduced to be provided to prospective residents at the same time as the residence contract. The disclosure statement will be prescribed by Regulations. The disclosure statement will include the following: > > All fees and charges that residents will be responsible for Prior to entering a village While residing in a village Upon leaving a village > > Definitions of fees, charges and funds > > Any circumstances under which a resident will be required to fund a special levy > > Any interest an operator has in services used within the village e.g. electricity or internet services > > the clear disclosure of any financial or contractual relationships between an operator s villages > > the clear disclosure of the option for early repayment of an exit entitlement when entering aged care. The disclosure statement will be provided with the residence contract to a prospective resident 15 business days prior to signing the contract. After signing the contract the resident would be provided with a 10 business day cooling off period (reduced from a current requirement for 15 business days). A resident is able to move into the residence earlier however they would waive the cooling off period if they choose to do so. Any fees and charges not included in the disclosure statement are not to be charged to the resident. Guide to the Retirement Villages Bill 2015 page 11

12 Alan... decided to move into a retirement village. He was able to obtain a disclosure statement from the two retirement villages which were of interest to him. The disclosure statements allowed Alan to easily compare fees and charges of the two villages and allowed him to choose a village that best suited his needs. 2.2 Premises Condition Reports Clause 19 (3) (d) Changes to requirements for a premises condition report aim to reduce current confusion about how a premises condition report is to be completed and when it is required to be provided to prospective residents. The Bill requires the premises condition report to be part of the disclosure statement, and therefore provided 15 business days prior to the signing of a contract. Where the actual date on which an item was replaced or repaired is not known, an approximate date can be recorded in the report. It will be an offence to deliberately provide an inaccurate condition report. 2.3 Ingoing contribution (Premium) to be held in trust Clause 20 It is proposed that an ingoing contribution is to be held in trust, regardless of to whom it is paid, until the resident takes occupation of their residence or advises they will not be entering the village. Should the prospective resident not enter the village, the ingoing contribution must be repaid. page 12 Guide to the Retirement Villages Bill 2015

13 3. Amendments applicable while living in a village 3.1 Residents committees and meetings Clause 32 The Bill provides clarification around the role of a residents committee in a retirement village. A member of a residents committee will incur no civil liability for an act or omission in good faith in the exercise of a committee member s functions. The purpose of the residents committee has been clarified as being to consult with the operator on behalf of the residents. The Bill allows for the Regulations to make provisions for the election, function and procedures of a residents committee. 3.2 Provision of minutes to residents and appointment of proxy Clause 31 In order to increase transparency, the proposed Bill requires that where a meeting of all residents is called by the operator or the residents committee, minutes are made available to all residents within 14 business days. These minutes will be placed in a location which is easily accessible by all residents. The Bill enables residents to appoint a proxy for meetings should they be unable to attend. 3.3 Increases in recurrent charges - Clause 26 The intent of amendments to provisions of the legislation dealing with recurrent charges is that all items included in recurrent charges are fully transparent and residents are provided with ample information about what is included in their recurrent charges, why any increase is occurring and the opportunity to ask questions about their recurrent charges. The Bill requires that all items included in recurrent charges are fully transparent and provided to residents at the annual meeting of residents. Items included as part of the recurrent charges are broken down to show a reasonable amount of detail of the items to which they relate and the costs. Operators should be required to provide a description of the components that make up the management expenditure portion of the recurrent charge. Guide to the Retirement Villages Bill 2015 page 13

14 3.4 Surplus and Deficit Schedule 2 - Part 4, Clause 10 Currently the way in which a surplus or deficit is dealt with is individual to the village and residence agreement. The Bill clarifies how a surplus or deficit is handled within a village. The Bill proposes that where a village does not have a policy for the management of a surplus or deficit, they are required to adopt a policy within six months of the commencement of the section. > > Should a village decide not to adopt a surplus and deficit policy, the Regulations will prescribe how these funds will be managed in the following way: It is possible for operators or residents to propose the expenditure of the surplus for a particular purpose such as a special project, or reducing future charges. > > It is also possible to propose the distribution of the surplus to the village residents. Residents must consent to any such proposal through a special resolution. > > Where a deficit occurs, the operator must fund the amount in question. Residents are only to fund a deficit when it is incurred because of an increase in specific costs which may be prescribed in the Regulations. These include costs such as urgent maintenance or increases in utility charges. > > The Regulations will be able to prescribe circumstances where an operator may increase recurrent charges to make good a deficit. 3.5 Consultation on the annual budget Clause 33 The current Regulations require that consultation must occur with a residents committee in relation to the annual budget. What constitutes consultation and its reasonableness has been a common query to OFTA and the proposed amendments seek to clarify this issue. The Bill clarifies that this consultation should include a minimum of two meetings between the operator and residents committee to discuss the budget prior to the annual meeting. It is possible for a residents committee to advise the operator in writing that it does not require a meeting to be held. The operator will convene a meeting by sending each member of the residents committee a written notice and agenda at least 10 business days prior to the date of the meeting. The operator s representative who meets with the residents committee will be required to have the requisite knowledge and authority to explain and respond to reasonable questions about the budget during the meeting. 3.6 Charges for new residences Clause 25 (3) (c) The current Act does not address how costs associated with new units are managed within a retirement village. The Bill clarifies the requirement that operators will be responsible for all recurrent charges and other costs associated with a newly built residence within a retirement village, until it is subject to a residence contract. page 14 Guide to the Retirement Villages Bill 2015

15 3.7 Clarification of auditing standards Clause 26 (6) In order to ensure that residents are able to obtain the true financial position of a village, the Bill includes provisions that require all funds to which residents contribute either directly or indirectly to be audited. At an annual meeting, residents will be required to be provided with: > > An audited statement of accounts of the previous financial year showing the income received and expenditure of that income for all funds including capital funds; > > A statement of estimates of income and expenditure for the current financial year; > > A statement of estimates of income and expenditure from a capital fund for the current financial year; > > A list of expenditure items paid for or proposed to be paid for by the recurrent charges for the current financial year; > > A description of expenditure and the amount of expenditure for each item relating to any management fee; > > If the management expenditure is apportioned between multiple villages or other businesses, a description of the manner in which each portion is calculated; > > Any other information required by Regulations. The auditing will be required to be done in accordance with requirements prescribed by the Regulations. 3.8 Behaviour Clause 57 There has been an increase in complaints brought to OFTA about behaviour of both residents and operators. To provide guidance about appropriate behaviour the Bill includes the requirement for residents and operators to observe the prescribed Code of Conduct within the Regulations. This Code of Conduct will be expanded to incorporate provisions designed to protect all parties from harassment and intimidation. 3.9 Rental tenants Clause 51 The current Act allows tenants to reside in retirement villages and the Bill will continue to allow this. However, the Bill clarifies that tenants must have an agreement under the Residential Tenancies Act It is also proposed to clarify that rental tenants will have rights relating to the Residential Tenancies Act 1995 rather than the Retirement Villages Act The Bill requires that the operator be required to repay any outstanding exit entitlement prior to being able to enter into a rental agreement in regard to a specific residence. Guide to the Retirement Villages Bill 2015 page 15

16 4. Amendments applicable to leaving a village 4.1 Exit fees Clause 19 The Select Committee noted that exit fees are a major source of complaints and proposed the improved disclosure of these fees. The Bill contains improvements in clarifying fees when leaving a village. All fees and charges will be included within a standard disclosure statement. If a fee is not included in the disclosure statement it is unable to be charged. The Bill proposes the clear disclosure of remarketing costs and conditions within the residence contract and the required reference to a specific dollar amount or percentage that will be charged. The disclosure statement will contain all fees and charges that a resident will be responsible for, including a description of that fee and the manner in which it will be calculated. 4.2 Rights relating to exit entitlement Clause 21 The current Act does not prescribe a statutory repayment and generally residents will receive repayment of their exit entitlement once the residence has been relicensed. The Bill proposes the introduction of the mandatory payment of an exit entitlement to a resident. The Bill requires that the amount must be repaid within 12 months of the resident ceasing to reside in the retirement village if not relicensed prior to this time. If payment of the exit entitlement at 12 months would cause serious financial hardship to the operator, the Tribunal may extend that period for a further period not exceeding 12 months, subject to any conditions considered appropriate in the circumstances of the case. Jean... left her retirement village in December Under the legislation Jean knew that should her property not be relicensed within 12 months she would receive payment of her exit entitlement. This provided her with assurance and allowed her to plan financially for the future. page 16 Guide to the Retirement Villages Bill 2015

17 4.3 Valuation Clause 21 (12) The Select Committee noted the difficulty in accessing pricing information when valuing a right to reside in a retirement village residence. This has made determining an accurate valuation more difficult for independent valuers. If an operator and the outgoing resident are unable to agree on valuation then the current market value is to be determined by an independent valuer. The Regulations will prescribe information that will be required to be provided to a valuer. 4.4 Termination of a resident s right to reside Clause 38 The Bill updates the provisions relating to termination of a resident s right to reside. The Bill includes that where a resident acts in a manner that seriously disturbs other residents or breaches the contract or residence rules, it is grounds for termination. A formal warning will be provided in writing and the dispute resolution process will need to be initiated. This provision fills a gap in the current legislation where a resident s behaviour may be serious enough to warrant termination but does not fall within the provisions of the current Act. As with the current provisions in the Act, any proposed termination will need to be confirmed by the Tribunal. 4.5 When a resident leaves to enter an aged care facility Clause 24 The Bill includes an update to the arrangements where a resident leaves to enter aged care. Changes have been made to ensure any further amendments to the Aged Care Act 1997 do not impact retirement village residents who would otherwise be eligible for an early repayment of an exit entitlement. Residents will continue to be able to apply for early repayment of an exit entitlement if they must pay a lump sum to enter aged care and meet criteria. Additionally, an operator will have the option of deferring the payment for a period of up to six months. During this period the operator will be responsible for the payment of fees attributable to the non-payment of the lump sum. This will be in addition to the final repayment of the exit entitlement. The Bill has also clarified that a resident may be requested to provide evidence as prescribed by Regulation that they would suffer financial hardship if required to pay the lump sum. The operator may apply to the Tribunal where payment would result in financial hardship, subject to any conditions considered appropriate to the circumstance of the case. A resident s right to apply for an early repayment for entry into aged care is also required to be included in the disclosure statement. Guide to the Retirement Villages Bill 2015 page 17

18 Michael... runs a retirement village. Five residents left the village at the same time to go into aged care. All of the residents had to pay a lump sum for their aged care accommodation. Michael wasn t able to pay an early refund to each resident. Instead he was able to pay interest on the lump sums for six months which gave him time to relicense the residences and pay the amounts in full. 5. Dispute resolution and the Tribunal 5.1 Dispute resolution Clause 39 & Clause 40 The Bill includes a formalisation of the dispute resolution process and requires that an application to the Tribunal not be made unless the parties have made reasonable attempts to resolve the dispute. 5.2 The Tribunal Clause 40 Several of the Select Committee s recommendations directly related to changes being implemented as part of the introduction of the South Australian Civil & Administrative Tribunal (SACAT). The introduction of the SACAT will result in the fulfilment of some of the Select Committee s recommendations including: > > the removal of a monetary jurisdictional limit for retirement village matters; > > requirements relating to who can hear retirement village matters; and > > the ability for residents to make a group application to the Tribunal. It is also proposed that an application to the Tribunal in relation to a dispute cannot be made if it occurred more than four years before the date of the application. The Tribunal will retain the right to hear an application outside four years depending on the circumstances of the case. The aim of this is to encourage the timely resolution of disputes within retirement villages. page 18 Guide to the Retirement Villages Bill 2015

19 6. Increased powers relating to offences and villages in financial difficulty 6.1 Powers of investigation Clause 16 The Bill has expanded the powers of authorised officers to enable increased powers of investigation and prosecution. While OFTA generally adopts an educational rather than adversarial approach to enforcement, sufficient power to be able to enforce requirements is still needed in certain situations. 6.2 Expiable offences The Bill includes an increase in the number and amount of penalties to ensure that they provide sufficient deterrence. It is proposed that the number of penalties is increased to ensure compliance of operators who persistently make relatively minor breaches. It will also be specified that any fines or other penalties incurred by an operator cannot be passed onto residents (clause 25 (3) (b)). 6.3 New offences Currently accommodation complexes which are not retirement villages, as defined in the Act, sometimes present themselves as retirement villages which may be misleading for people considering entry to these complexes. The Bill proposes amendments to make it an offence for a person who manages or controls a complex to present or advertise it as a retirement village when it is not one as defined by the Bill (clause 58). 6.4 Financial difficulty and mismanagement Clause 41 There are no provisions in the current Act relating to the ability of a retirement village to continue operating when it is in financial difficulty or being mismanaged. It is to the detriment of consumers and operators that the current powers allow only for reactive responses rather than providing an opportunity for preventative measures to be taken. The Bill includes specific provisions enabling the Minister to appoint an administrator, receiver and manager, as well as provisions allowing a village to continue operating when in receivership. 6.5 Liability of director or manager Clause 60 The Bill includes clarification that where a body corporate is guilty of an offence, a director is also guilty of an offence and liable to the same penalty. Guide to the Retirement Villages Bill 2015 page 19

20 7. Frequently Asked Questions 7.1 Resident Frequently Asked Questions Why a new Retirement Villages Bill? Since the original Act was implemented in 1987, the retirement villages industry has evolved significantly and there is both strong concern among the community and evidence that the Act does not provide adequate consumer protection. The current Act has had a significant number of amendments since it came into operation in 1987, and for this reason a new Bill is proposed. How does the Bill respond to the Select Committee s recommendations? The State Government tabled a response to the Select Committee recommendations in May The Government response supported the intentions of the Select Committee s recommendations and the majority of the recommendations of the Select Committee are incorporated into the Bill. These recommendations were primarily concerned with clarifying the rights and responsibilities of both operators and residents under the Act, enhancing information disclosure requirements, providing tighter definitions and implementing improved consumer protections. The Retirement Villages Bill 2015 is part of a package of broader measures aimed at ensuring the ongoing confidence and growth of the retirement villages industry, including the development of Better Practice Guidelines and the establishment of an advocacy service for retirement village residents. How will the proposed Bill affect prospective residents? One of the most significant changes which will affect prospective residents will be the introduction of a standard disclosure statement to improve transparency and clarity of residence contracts. The introduction of a standard disclosure statement will provide prospective residents with a standard summary of fees and charges within the contract and allow residents to make an informed decision when entering into a residence contract. How will the changes affect current residents? Current residents will still be bound by their current residence contract. There are a range of changes that will impact on current residents rights and responsibilities: > > Providing improved transparency of village funds the Bill proposes changes which will significantly increase transparency of village funds including breaking down management fees, providing details of expected consultation with residents regarding the village budget and requirements to meet with residents about finances. page 20 Guide to the Retirement Villages Bill 2015

21 > > Clarifying current legislative provisions a number of current provisions will be clarified for residents and operators including specifying who is responsible for the payment of recurrent charges for newly built homes and further defining the role of the residents committee within the village. > > Increasing powers of investigation and compliance the introduction of expiable amounts will help to reinforce operators obligations under the Bill and serve as a deterrent to non-compliance. > > Improving protections for residents and operators improved mechanisms for the protection of resident funds and providing operators with the option of removing disruptive and difficult residents through a tribunal process. Will the changes affect residents fees? The Bill provides for responsible management of residents funds by strengthening auditing requirements and improving transparency of financial reporting. The Bill also introduces provisions relating to what is to occur when a surplus or deficit occurs in a village s recurrent fees. How will the changes affect residents who move to an aged care facility? The Bill includes an update to the arrangements where a resident leaves a village to enter aged care. Changes have been made to ensure any further amendments to the Aged Care Act 1997 do not impact retirement village residents who would otherwise be eligible for an early repayment of an exit entitlement. Residents will continue to be able to apply for early repayment of an exit entitlement if they must pay a lump sum to enter aged care and meet other criteria. Additionally, an operator will have the option of deferring the payment for a period of up to six months. During this period the operator will be responsible for the payment of fees attributable to the non-payment of the lump sum. This will be in addition to the final repayment of the exit entitlement. When will the changes come into operation? There are many steps to be undertaken prior to the enactment of new legislation however it is anticipated that the changes will be introduced by the end of Provisions relating to statutory repayments for exit entitlements will have a transitional period to allow operators to put into place any adjustments to their businesses which are necessary to prepare for changes to legislation. An education process will also be undertaken to ensure operators are aware of the changes being implemented and when they will come into force. Guide to the Retirement Villages Bill 2015 page 21

22 7.2 Operator Frequently Asked Questions Why a new Retirement Villages Bill? Since the original Act was implemented in 1987, the retirement villages industry has evolved significantly and there is both strong concern among the community and evidence that the Act does not provide adequate consumer protection. The current Act has had a significant number of amendments since it came into operation in 1987, and for this reason a new Bill is proposed. How does the Bill respond to the Select Committee s recommendations? The State Government tabled a response to the Select Committee recommendations in May The Government response supported the intentions of the Select Committee s recommendations and the majority of the recommendations of the Select Committee are incorporated into the Bill. These recommendations were primarily concerned with clarifying the rights and responsibilities of both operators and residents under the Act, enhancing information disclosure requirements, providing tighter definitions and implementing improved consumer protections. The Retirement Villages Bill 2015 is part of a package of broader measures aimed at ensuring the ongoing confidence and growth of the retirement villages industry, including the development of Better Practice Guidelines and the establishment of an advocacy service for retirement village residents. What are the main changes which will affect operators of a retirement village? The Bill includes substantial changes that will have a wide range of impacts benefiting both operators and residents of retirement villages. The Bill aims to reflect the changes in contemporary society while noting the need to maintain flexibility within current business processes that support the variation of schemes within the industry and the ongoing needs of an ageing population. Changes to the use of the term retirement village and greater protections for residents will improve consumer confidence and ensure retirement villages remain an attractive accommodation option for seniors. page 22 Guide to the Retirement Villages Bill 2015

23 Statutory Repayment The Bill proposes the introduction of the mandatory repayment of an exit entitlement to a resident. The Bill requires that the amount must be repaid within 12 months of the resident vacating the premises if not relicensed prior to this time. If repayment of an exit entitlement at 12 months would cause serious financial hardship to the operator, the Tribunal may extend that period for a further period not exceeding 12 months, subject to any conditions considered appropriate in the circumstances of the case. Early repayments for residents who leave to enter an aged care facility The Bill proposes increased flexibility for operators when a resident leaves a village to enter an aged care facility. Changes have been made to ensure any further amendments to the Aged Care Act 1997 do not impact retirement village residents who would otherwise be eligible for an early repayment of an exit entitlement. Residents will continue to be able to apply for early repayment of an exit entitlement if they must pay a lump sum to enter aged care and meet other criteria. Additionally, an operator will have the option of deferring the payment for a period of up to six months. During this period the operator will be responsible for the payment of fees attributable to the non-payment of the lump sum. This will be in addition to the final repayment of the exit entitlement. The Bill also clarifies that a resident may be requested to provide evidence that they would suffer financial hardship if required to pay the lump sum. This may include a copy of an asset assessment undertaken as part of the resident s entry into the aged care facility. A resident s right to apply for an early repayment for entry into aged care is also required to be included in the disclosure statement. How will the changes affect current contracts? Current residents will remain bound by the terms of their contract however a range of changes will impact requirements relating to the residency of both current and prospective residents including: > > Providing improved transparency of village funds the Bill proposes changes which will significantly increase transparency of village funds including breaking down management fees, providing details of expected consultation with residents regarding the village budget and requirements to meet with residents about finances. > > Clarifying current legislative provisions a number of current provisions will be clarified for residents and operators including specifying who is responsible for the Guide to the Retirement Villages Bill 2015 page 23

24 payment of recurrent charges for newly built homes and further defining the role of the residents committee within the village. > > Increasing powers of investigation and compliance the introduction of expiable amounts will help to reinforce operators obligations under the Bill and serve as a deterrent to non-compliance. > > Improving protections for residents and operators improved mechanisms for the protection of resident funds and providing operators with the option of removing disruptive and difficult residents through a tribunal process. How will the changes affect contracts for residents who enter the village after the introduction of changes? Disclosure Statement To ensure that potential residents better understand their contracts and minimise disputes it is proposed a disclosure statement is introduced to be provided to prospective residents at the same time as the residence contract. The disclosure statement will include the following: > > All fees and charges that residents will be responsible for Prior to entering a village While residing in a village Upon leaving a village > > Definitions of fees, charges and funds > > Any circumstances under which a resident will be required to fund a special levy > > Any interest an operator has in services used within the village e.g. electricity or internet services > > the clear disclosure of any financial or contractual relationships between an operator s villages > > the clear disclosure of the option for repayment of an exit entitlement when entering aged care. The disclosure statement will be provided with the residence contract to a prospective resident 15 business days prior to signing the contract. After signing the contract the resident would be provided with a 10 business day cooling off period (reduced from a current requirement for 15 business days). A resident is able to move into the residence earlier however they would waive the cooling off period if they choose to do so. Any fees and charges not included in the statement are not to be charged to the resident. page 24 Guide to the Retirement Villages Bill 2015

25 What other changes does the Bill propose? Removal of disruptive residents The Bill introduces a new provision allowing operators to apply to the Tribunal for the removal of disruptive residents if warnings and dispute resolution processes are not successful. This provision fills a gap in the current legislation where behaviour may be serious enough to warrant termination but does not fall within the provisions of the current Act. Representations relating to retirement villages The Bill proposes the introduction of restrictions to when representations are made as to whether a residential complex is a retirement village. This will ensure that when purchasing in a retirement village, consumers can be assured that they fall under the Bill and have the protections provided by legislation. This will increase confidence in the industry and further strengthen the reputation of retirement villages. It will ensure complexes that are not retirement villages do not represent themselves to be one. When will the changes come into operation? There are many steps to be undertaken prior to the enactment of new legislation however it is anticipated that the changes will be introduced by the end of Provisions relating to statutory repayments for exit entitlements will have a transitional period to allow operators to put into place any adjustments to their businesses which are necessary to prepare for changes to legislation. An education process will also be undertaken to ensure operators are aware of the changes being implemented and when they will come into force. Guide to the Retirement Villages Bill 2015 page 25

26 How can I provide feedback on the Retirement Villages Bill 2015? There are a number of ways to learn more about the Bill and provide feedback. For more information about the changes, planned public forums and to access the reference documents, please visit: or via YourSAy at: All submissions must be in writing; a feedback form has been developed and can be submitted in the following ways: Online Survey provide your formal feedback by completing the online survey: provide your formal feedback via to: Health.RVActReview@health.sa.gov.au Post Retirement Villages Review, Office for the Ageing, PO Box 196, Rundle Mall, Adelaide SA 5001 Feedback closes at 5pm Friday 24 April Late submissions will not be considered. If you have any questions about providing feedback please contact Office for the Ageing on page 26 Guide to the Retirement Villages Bill 2015

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28 For more information Office for the Ageing Department for Health and Ageing PO Box 196 Rundle Mall Adelaide 5001 Telephone: (08) Public-I3-A2