Villagers slam retirement group

Large retirement village operator Aveo has been accused by residents of bad business practices including “churning, gouging, safety issues and misleading marketing”, according to Fairfax Media.

At the core of most of the complaints are claims that Aveo’s contracts are overly dense, the exit fees charged are crippling and when residents or their estates sell their village apartments back to the operator, they are forced to accept  knock-down prices.

A listed company, Aveo posted a statement to the Australian Securities Exchange yesterday morning in response to the media reports published at the weekend. It said that it was “committed to enhancing the lives of older Australians by improving living choices”.

But chair of Consumers Federation of Australia Gerard Brody told YourLifeChoices he believed Aveo’s contracts were unfair.

Mr Brody, who is also chief executive of the Consumer Action Law Centre in Victoria, said the issue – of retirees who were unhappy with their village contracts – is incredibly widespread, spanning the whole nation.

“These are big operators with national businesses and it is the business model (of using exit fees as pure profit) which needs to be tackled to avoid losses to residents,” he said.

“State governments must be the first to respond. I urge all retirement village residents who feel aggrieved to call on their respective state governments to improve regulation of the sector so people are treated fairly.”

In Victoria, a state parliamentary inquiry in March recommended that the government appoint an ombudsman to the sector to deal with grievances. So far, no action has been taken.

Currently, government consumer associations are able to conciliate disputes between residents with village operators, but they have no power to resolve matters.

“We have been calling for an ombudsman with the power to make enforceable decisions because at the moment the only way a resident can hope for a favourable outcome is by using expensive lawyers,” Mr Brody said.

He added that while many residents caught in the exit fee trap may have used legal advice before signing an agreement, “often lawyers do not do much more than ensure that the contract is legal”.

“It might be fine in terms of existing law, but that doesn’t mean the contract is fair,” he said.

“Even if fees are disclosed at the start, residents often don’t pay attention to them because they think it will be a long time into the future before they have to be paid.

“They do not foresee circumstances, such as poor health, that requires them to sell earlier than they hoped, to go into aged care, only to find after the exit fees that they do not have much change left over.”

“My advice to those considering signing a contract with a retirement village operator is to get advice first and understand the fees involved thoroughly … I would also be querying if moving into a village is even a good option.”

What can you do if you need help?
The following organisations provide consumer advice on retirement village matters in your state or territory: 

Vic                 Consumer Association of Victoria
NSW               Office of Fair Trading
Qld                Office of Fair Trading
SA                  Consumer and Business Services
WA                 Department of Commerce
Tas                Consumer Affairs and Fair Trading
NT                  NT Consumer Affairs
ACT                Access Canberra

The following organisations provide free legal advice in your state or territory:
Consumer Action Law Centre, Victoria
Legal Aid, Queensland
Legal Aid, New South Wales
Legal Aid Western Australia
Legal Aid Commission of Tasmania
Legal Services Commission of South Australia
Legal Aid, Northern Territory
Legal Aid ACT

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Written by Olga Galacho

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