Aged Care Steps has launched a consultation project that includes a discussion paper and stakeholder research looking into what it called a “worrying trend” of unlicensed advice in the aged care sector.
The firm said that though aged care advice is an inherently complex area, both financially and strategically, unlicensed and unregulated businesses and services are increasingly providing this financial advice on aged care.
According to Louise Biti, director of Aged Care Steps, the result is superficial, often conflicted advice, no regulatory oversight, and a lack of essential consumer protections, which could place the client at substantial risk and lead to decisions that are not well-informed.
“The variety of care options, rush to make immediate decisions, cost of advice, complicated fee structures, conflicts of interest, and raw emotions are just a few of the challenges people face when accessing aged care advice,” said Biti.
“Moreover, aged care legislation, choices and costs associated with aged care are constantly changing, enhancing the difficulties with planning and education.”
While personal advice is clearly regulated under the Corporations Act 2001, the discussion paper said there is a “range of contrasting views” about personal advice on aged care, which focuses on strategic outcomes that include advice on financial products including basic deposit products.
“This confusion complicates the objective set out by the government to increase the sustainability and funding mix of the aged care industry for the ultimate benefit of older Australians,” Biti said.
“We believe that the delivery of personal advice on aged care financial decisions needs to be examined and regulations need to be clarified and more consistently applied to protect older Australians and their families.”
The discussion paper explores the need for greater oversight of individuals and organisations who provide aged care financial advice, including consideration of whether they should be authorised under an AFSL and comply with financial advice laws, regulations and ethical codes.
“Unlicensed and unregulated advice also opens opportunities for greater incidence of elder abuse,” the paper said.
“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.”
It explained that with the large number of organisations involved in aged care services and the “diversity in expertise and focus, obligations, consumer protections, and potential conflicts and biases” that arise throughout the process, finding the proper support becomes challenging.
“Many of these services offer assistance and advice to help clients understand financial options. However, they may leave the ultimate decision-making to individuals or families, who are generally ill-prepared and prone to poor decisions about funding their aged care,” the paper said.
“Where the services assist decision-making, the unregulated providers often focus decision-making on immediate outcomes without considering the full implications for the client.
“Unregulated advice services may need checks to monitor conflicts and biases in their advice and assistance as well as valid expertise, but without a regulatory framework, there is no oversight to ensure this occurs. Both advice types (when sitting outside a licensed environment) are shallow, need more regulatory oversight and consumer protection, and often lead to poor consumer outcomes.”
Aged Care Steps has called for stakeholders within the financial services sector, aged care sector and other connected support areas as well as older Australians and their families, to participate in its survey-based research.
The consultation period will run until 5pm on 10 May 2024, which will be followed by a white paper as a basis for “engagement with the relevant industry bodies and regulators to work towards meaningful changes in the regulation of aged care advice in the interest of protecting older Australians”.
