Decisions relating to aged care funding are among the most significant financial decisions many Australians will make, with long-term consequences not just for the individual but also for their families. The complexity of aged care financing, intertwined with estate planning, taxation, and social security, can overwhelm even financially savvy individuals, highlighting the need for high-quality professional advice.
The financial decisions required to navigate aged care are further compounded by a multi-faceted system involving numerous stakeholders, including government agencies and care providers. Frequent legislative and regulatory changes contribute to a dynamic and often overwhelming environment for those seeking to navigate it.
Given the vulnerability of many older Australians, it is critical that the guidance they receive is accurate, appropriate, and aligned with their best interests.
But the current landscape of aged care financial advice is fragmented and inadequately regulated. This situation raises serious concerns about the quality and consistency of advice available to older Australians and their families. A wide range of advice sources exist, from general information to complex personal advice, making it difficult for consumers to determine where to seek reliable guidance. Increasingly, unlicensed providers – including aged care providers, placement services, and individuals no longer authorised to provide financial advice – are offering strategic aged care advice without appropriate regulatory oversight. This has led to conflicted, inconsistent and sometimes inaccurate advice, heightening the risk of poor financial outcomes and potential elder abuse. In addition, Centrelink Financial Information Service (FIS) officers have, at times, provided specific financial advice that extends beyond general information and may be inaccurate or outside their mandate.
This lack of clear boundaries between information and personal financial advice has created regulatory gaps that place consumers at risk. When unqualified or unregulated providers cross into the provision of financial advice, older Australians may make decisions with serious and irreversible financial and estate planning consequences. This situation may also undermine public confidence in, and acceptance of, higher user contributions for aged care services.
Addressing these issues is not only a matter of individual consumer protection, but also a significant public policy concern.
Based on extensive industry and stakeholder consultation, Aged Care Steps proposes five key recommendations for stronger regulation of aged care financial advice. They are:
- Clarify aged care financial advice as Personal Financial Product Advice: Aged care financial advice should be clearly defined as personal financial product advice under the Corporations Act, and only authorised providers under an AFSL should be allowed to offer it. This can be achieved by amending Section 764A of the Corporations Act to explicitly include aged care advice and/or the Refundable Accommodation Deposit (RAD) and its Daily Accommodation Payment (DAP) equivalent in the definition of financial products.
Such a framework would significantly strengthen consumer protection by ensuring advisers act in their clients’ best interests, meet minimum education and competency requirements, hold professional indemnity insurance and participate in an external dispute resolution scheme. These safeguards are not available when advice is provided by unlicensed or unregulated individuals.
- Enhance regulation and enforcement: Strengthen ASIC’s role in overseeing aged care financial advice. Encourage ASIC to issue a regulatory guide to clearly distinguish between information and financial product advice on aged care funding recommendations to ensure greater clarity and consumer protection.
- Improve identification of licensed advisers: The Financial Advisers Register should include financial planning specialisation categories and aged care funding advice should be added as a distinct category to help consumers find qualified professionals.
- Educate consumers: Launch a public campaign to raise awareness about the value of licensed financial advice, how to find licensed advisers and the dangers of unlicensed advice.
- Address accessibility: Explore ways to make aged care financial advice more affordable, such as through subsidies or new service models.
By 2057, 22 per cent of Australians, or 8.8 million people, are expected to be 65 years or older. It is essential that older Australians are able to access the support and advice they need to plan for, manage and fund their care needs. Getting it wrong has far-reaching financial and emotional implications for individuals and families, and economic implications for the nation. In this context, the government must ensure Australians can make sound financial decisions to fund their aged care needs.
Assyat David is a director of Aged Care Steps. This is an edited extract from the Aged Care Steps white paper: The risk of unregulated aged care advice. Representatives from Aged Care Steps will be at the upcoming Conexus Advice Policy Summit on February 23-24 to advocate for aged care advice reform.
