It's Time for Federal Regulation of Retirement Villages
| Author | Paul Latimer |
| Published date | 01 September 2017 |
| Date | 01 September 2017 |
| DOI | http://doi.org/10.22145/flr.45.3.5 |
| Subject Matter | Article |
IT’S TIME FOR FEDERAL REGULATION OF RETIREMENT
VILLAGES
Paul Latimer*
ABSTRACT
As Australia’s population ages, increasing numbers of seniors move to a growing
number of retirement villages. Unlike time shares, which are ‘managed investment
schemes’ and therefore regulated as ‘financial products’ under corporate law
administered nationally by the A ustralian Securities and Investments Commission
(ASIC), the Commonwealth withdrew from the regulation of retirement villages in the
1980s on the basis that at that time they were local, usually run by religious bodies and
charities a nd were not of national concern. The regulation of retirement villages was
taken over by the states and territories under their non-uniform Retirement Villages Acts
and the common law. Until then retirement villages, often indistinguishable from
Commonwealth regulated timeshares, were regulated in the original State and Territory
Uniform Companies Acts in 1961 as ‘interests’, and then in later Commonwealth
legislation as ‘prescribed interests’ by the forebe ar of ASIC, the then National
Companies and Securities Commission (NCSC) with the State and Territory Corporate
Affairs Commissions as its ‘delegates’. Today retirement v illages, which are largely
owned and managed by the corporate sector, raise many issues of national concern such
as accountability, fees and the rights of residents. Some aspects of retirement villages
such as directors’ duties, fundraising, prospectuses and unregistered schemes are
regulated as corporations by ASIC under the Corporations Act 2001 (Cth), but retirement
villages are not regulated as ‘financial products’ under corporate law.
This article challenges the effectiveness of state and territory regulation of retirement
villages and calls for federal regulation of retirement villages by br inging retirement
villages into the definition of ‘financial product’ in the Corporations Act 2001 (Cth) and
in the Australian Securities and Investments Commission Act 2001 (Cth). As financial
products, re tirement villages would then be regulated by Commonwealth legislation
which deals with financ ial services and financial markets, as regulated by ASIC. These
laws include consumer protection provisions such as the prohibition of misleading or
deceptive conduct, unfair contract terms, unconscionable conduct, licensing and high
standards for those in the retirement village industry. This w ould result in a return to
Commonwealth leadership of the regulation of retirement villages to harmonise and to
* LLB, LLM (Syd), PhD (Monash); Adjunct Professor, Swinburne Law School, Melbourne.
Acknowledgments to former corporate r egulators Richard Cockburn, Michael Duffy,
Andrew Serpell and Greg Tanzer for comments on an earlier draft of this article.
470 Federal Law Review Volume 45
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consolidate the current mix of state and territory regulation with federal legislation
including an enforceable Retirement Villages Code of Conduct.
I INTRODUCTION
Australia’s population of over 65s is expected to rise in a silver tsunami from 3.2 million
in 2012 to between 5.7 million and 5.8 million in 2031 as the baby boomers born in the
late 1940s become seniors.
1
Statistics in 2011 showed th at about 3.5 per cent of over 65s
live in retirement villages, with higher numbers in some states (Western Australia 7 per
cent, South Australia 8 per cent).
2
There are many options for a ccommodation for seniors, and most continue with
community living. Many will downsize, some may sta y on in the family home, maybe
with modifications, and with or without support. Some may require com munity based
aged care assistance or residential aged care, the latter provided largely by religious
bodies and charities, and increasingly by private providers with a profit motive, all
governed by Commonwealth legislation in the form of the Aged Care Act 1997 (Cth)
which provides for funding of and for high quality of care and accommodation for
recipients.
There are estimates of around 184 000 older Australians living in 2300 retirement
villages in Australia set up to provide accommodati on, health a nd social be nefits f or
their elderly residents.
3
Retirement villages may comprise serviced apartments and/or
assisted living units, or they may be integrated with residential aged care, or be set up
to help with the delivery of aged care support. They are excluded from the standard
definition of aged care and do not usually cater for those who need high levels of care
and supervision.
4
Retirement villages were included in the Companies Act 1981 (Cth) (‘Companies Act’)
and Codes up to 1985
5
as ‘prescribed interests’,
6
which carried forward legislation from
Victoria dating back to 1955. They were re moved from the then Companies Act in 1987,
1
Australian Bureau of Statistics, 3222.0—Population Projections, Australia, 2012 (base) to 2101 (2
December 2013)
<http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/3222.0Main%20Features5201
2%20%28base%29%20to%202101?opendocument&tabname=Summary&prodno=3222.0&is
sue=2012%20%28base%29%20to%202101&num=&view>.
2
Productivity Commission, Caring for Older Australians, Productivity Commission Inquiry
Report No 53 (2011) vol 2, 309.
3
Productivity Commission, Housing Decisions of Older Australians, Productivity Commission
Research Paper (2015) 98, citing Property Council of Australia, Retirement Living and Grant
Thornton, National Overview of the Retirement Village Sector, Prepared on behalf of the
Property Council of Australia and the Retirement Living Council (2014)
<http://www.retirementliving.org.au/wp-content/uploads/2015/03/National-overview-
of-the-retirement-village-sector-Grant-Thornton.pdf>.
4
Michael Barnett and Robert Hayes, ‘Not Seen and Not Heard: Protecting Elder Human Rights
in Aged Care’ (2010) 14 University of Western Sydney Law Review 45, 52.
5
This was the former co-operative scheme for companies and securities, as discussed below at
Part V B.
6
Retirement villages as ‘prescribed interests’ are discussed below at Part V B.
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