A “worrying trend” has emerged of aged care advice being provided by unlicensed and unregulated businesses, prompting Aged Care Steps to seek industry help to write a policy position to take to government arguing for regulating aged care funding advice.
A consultation paper released by the aged care service provider posits a lack of oversight has led to “a prevalence of superficial, often conflicted advice, no regulatory oversight and a lack of essential consumer protections”, which is putting clients at risk.
“Unlicensed and unregulated advice also opens opportunities for greater incidence of elder abuse,” the paper says.
“This situation underscores the need to reassess the regulatory framework governing aged care advice, ensuring that where financial options and outcomes are considered by an ‘advice provider’, the advice is holistic rather than solely strategic, legally compliant, and consumer-focused.”
Aged Care Steps director Louise Biti tells Professional Planner the aim of the consultation is to get an agreed industry position to put to government to prevent the “proliferation” of unlicensed advice and make sure it is a level playing field.
“Our view is it should be licensed under current legislation and there’s a lot of reasons why we think that should remain so,” Biti says.
Biti notes current regulations provide for professional standards, a requirement to have adequate professional indemnity insurance, and being registered with external dispute resolution services, all of which provide consumer protections and lead to better client outcomes.
However, she notes that regulation has an impact on the cost of advice.
“We also recognise that comes with costs in the delivery of advice and that starts to raise questions about affordability as well,” Biti says.
“What we’re trying to get is an industry standard across, where it fits under current legislation, what could we perhaps change or put forward to government as regulatory change to make it accessible, affordable and also start to regulate those that sit outside the legislation as well and stop some of the practices happening.”
The paper has asked for stakeholder feedback by 10 May 2024 on formulating a policy direction to help better regulate the sector.
Following feedback on the consultation paper, the group will develop a white paper to highlight the importance of comprehensive strategic advice for clients when making aged care funding decisions and whether holding an AFSL should be mandatory when providing aged care funding advice.
“Additionally, we aim to explore the limitations on what aged care advice funding can be given without an AFSL, the implications if aged care funding advice becomes licensed, and propose potential legislative changes to protect consumers,” the paper says.
The paper argues that providing personal advice about aged care funding options needs to be clarified and more consistently applied to protect older Australians and their families.
“Personal advice, which leads to investment into specific financial products, is clearly regulated under the Corporations Act 2001 as personal advice,” the paper says.
“However, a range of contrasting views exist about personal advice on aged care, which focuses on strategic outcomes, albeit strategic outcomes which include advice on financial products including basic deposit products.”
Ben Marshan Consulting, led by the former Financial Advice Association head of policy, was enlisted to write the consultation paper as well as the whitepaper.
“At the moment there are people out there who are helping to do calculations to people and helping them make decisions around how to pay for RADs [refundable accommodation deposit], how to pay for accommodation costs,” Marshan says.
“But they’ve got no professional indemnity insurance, no registration, there’s no regulatory oversight so effectively the consumer is trusting the person they’re speaking to and if something goes wrong, who’s accountable?”
Marshan says the aged care landscape has changed significantly over the past couple of years in light of the royal commission into the aged care sector, and complexity has compounded how difficult it is to get advice from someone who is across all the specialist details.
“Finding somebody who is across all this detail and is acting in the best interests of clients is critically important around making decisions for aged care,” Marshan says.
