Care sector legal framework risks being unfit for purpose - Retirement Commissioner

By Kim Savage and Emma Hatton of RNZ

The Retirement Commissioner is recommending the Government urgently review the laws around retirement villages to better protect the elderly.

A report by the commissioner's office, the Commission for Financial Capability (CFFC), pointed out the legal framework of the sector had not been reviewed in its 20-year history, and Jane Wrightson said it was at risk of becoming unfit for purpose.

"I think it needs to happen because it will take a while, these reviews would normally take one to two years and probably you'd be thinking about regulatory or statutory change as well, because you have to look at the economic model in way more depth than we have done."

She said the review had found issues both big and small, which needed to be addressed and a piecemeal approach to change would not suffice.

"We do have some low hanging fruit in terms of plain English documentation, voluntary improvement in the complaints system, that kind of stuff, but it doesn't mean that the framework itself gets better, it just means that some of the deeper issues haven't been yet resolved."

Residents in retirement villages were not owners, which meant they did not share in capital gain, have ownership rights and nor did they have any responsibility for maintenance.

"But neither are they tenants, so they don't have the same rights that tenants have. And given that tenants rights have changed over time, you would think that this would be an area that would be of some interest," Wrightson said.

"So when a category of people fall between two stalls, it means that the regulatory framework around it has to be crystal clear, and it's not especially."

Retirement Village Residents' Association president Peter Carr said residents were hugely supportive of the idea, saying the regulations were outdated and favoured the operators.

"There are some very happy people in villages and they're getting quality of life, but when they come up against the system, where there is something that upsets them, the methodology of many cases of dealing with their own unease is cumbersome, heavy handed.

"And with the average age of 81 years of age - and many of these are single ladies - they really could do without that sort of hassle and stress."

Carr said similar to changes in the works for insurance policies, simple straightforward wording of contracts was an example of something that needed probing.

"They take the word of the lawyer, they don't understand the jolly thing... we're after some common, sensible, same-wording contracts so everyone knows where they sit."

Review excessive and would hit competitiveness - operator

Meanwhile, operators said a full-scale review would be "excessive".

Retirement Villages Association executive director John Collyns acknowledged there were problems and things that could be done better but said a review was not necessary.

"We are very keen to work with the Commission and others to make sure that the commercial terms of the sector reflect market realities and residents needs whereas the legislation itself, which is the framework under which the system operates... we think that's world leading and doesn't need to be reviewed at all.

He was worried changing the legislation would impact operators' ability to compete in the market.

"Commercial terms are what distinguish one village from another and it means there are a huge range of choice for residents to make and our concern is that if you start interferring and regulating the commercial terms that choice is going to be reduced.

"I think the Commissioner confuses the commercial terms with the legislative framework."

He said those residents who submitted on the proposal made up about 5 percent of all residents.

"And I would suggest this actually means that we are meeting the expectations of the vast majority of residents and we've struck the right balance between a robust regulatory oversight and effective self-governance."

The CFFC has offered to draw up the terms of of reference for the review, and the decision to proceed now lies with the government.

RNZ