Call for ASIC to Regulate Aged Care Financial Advice

With the financial arrangements for nursing homes becoming increasingly more complex, there has been a call for aged care financial advice to be regulated by the Australian Securities and Investments Commission (ASIC).

Recently Estia Health became the latest aged care provider to charge an additional fee for residents who choose to pay for their accommodation in a lump sum, rather than in instalments and aged care specialists argue that such fees, which are also charged by listed groups Regis Aged Care and Japara Healthcare, added another layer of complexity to an already complicated financial model.

Consumers are vulnerable

It’s important that you obtain advice from a reputable advisor who has experience and training in the Aged Care Sector. Consumer groups are concerned that in the absence of official oversight, consumers are at risk of being subjected to inexperienced and misinformed financial advisors at a time when they need to make important financial decisions, often under distressing circumstances and in a hurry. Some financial advisers call themselves aged care specialists even though they have no expertise.

The Financial Planning Association (FPA) has argued that after estate planning and establishing a business using various structures, aged care financial advice was the next most complicated area of personal finance. It is significantly more complicated than normal, run-of-the-mill advice over setting budgets, transition to retirement strategies and salary sacrificing and the number of people seeking aged care advice is likely to grow as the population ages.

Call for regulation

Aged care financing is not a financial product and therefore not governed by ASIC. The Council of the Ageing (COTA) are pressing for that to change.

The FPA has also recently suggested that rather than turning aged care advice into a financial product, the government could introduce legislation requiring aged care advice to be regulated by ASIC in the same way as financial product advice.

The call for official scrutiny of aged care financial advice comes as analysts raise questions about the sustainability of earnings at the three big aged care providers. Bank of America Merrill Lynch has downgraded Estia, Japara and Regis following detailed analysis that revealed the stocks were facing zero earnings growth. Estia and its peers have come under pressure due to constraints on federal government grants called Aged Care Funding Instruments, which are given to the operators to look after their residents.

In early June Estia introduced an $18 a day charge for residents who meet the cost of their accommodation upfront, rather than paying in instalments. Regis has a $13.70 a day “asset replacement contribution”, while Japara has introduced a “capital refurbishment fee”, set at $10 a day. Understanding extra fees such as these is crucial.

Get good advice

At Morrows we have specialist Aged Care Advisors within our team of financial advisors. We have helped many of our clients navigate through the Aged Care maze and understand that this can be an anxious time for you and your family with a number of important financial decisions that need to be made.

We can provide great comfort by carefully explaining how facilities charge, payment options, the best way to pay for care and the overall impact on your personal financial situation so you can fully understand what alternatives are available and make the best decision for you or your loved one’s care.

If you wish to discuss anything to do with aged care, please contact our specialist advisor Allison Hyland on 9690 5700 or email ahyland@morrows.com.au.

Source: afr.com