Calls have been made for an urgent review into retirement village legislation to give residents more consumer protection from unfair contracts.
Retirement Commissioner Jane Wrightson said in a new report last week that residents in the fast-growing sector were neither owners nor tenants, and it was time to assess and reset the regulatory balance to ensure they were being treated fairly.
“In the 20 years since the legislative framework was established, there has been no review to assess whether the balance of power between operator and consumer is appropriate,” she said. “We found competing tensions that are unresolved, and recommend a full review of the framework be carried out as a matter of urgency.”
The new report follows on from public consultation by the Commission for Financial Capability (CFFC) on its discussion paper, “Retirement villages legislative framework: assessment and options for change”, which looked at the complex legal framework governing the retirement village sector.
The CFFC received nearly 3300 submissions from individuals, the Retirement Village Residents’ Association, Consumer NZ, retirement village operators, lawyers and other stakeholders.
Concerns raised included how long it took to resell a property after death, the fact that operators retained all capital gain, weekly fees continuing to be charged when a unit was vacated, an overly complicated complaints system and confusing documentation.
“These issues are important because it is difficult to leave a village once contracts are signed,” Ms Wrightson said. “Residents are neither owners nor tenants and their consumer protections are limited. It is therefore important that fit-for-purpose legislative protections are in place.”
She said almost all individual submitters, the residents’ association and most other stakeholders, including the New Zealand Law Society, supported a full review of the regulatory framework. The only people who didn’t support the review were retirement village operators and industry organisation the Retirement Villages Association (RVA), although they agreed some areas may need improvement.
The RVA launched its own “blueprint” at its annual conference in May, which it said would provide residents with a stronger voice, strengthen the complaints process and work with the CFFC to develop best practice standards.
Although the CFFC welcomed and encouraged the approaches suggested in the blueprint, Ms Wrightson said these measures should only be considered an interim step.
“We do not believe they are sufficient in scope or impact to circumvent the need for a full review. The retirement village sector is growing and if the Government does not review the regulatory framework now, New Zealand runs the risk of ending up with a weak framework that does not properly protect older consumers and their families,” she said.
“Change has been slow and the submissions we received confirm that many important issues remain unresolved and problematic. A piecemeal approach to change is insufficient. The industry has grown in scope and complexity since the framework was drawn up, yet it is still a young industry. In the interests of both consumers and operators, it’s time the balance was reset.”
The CFFC report and its findings have been presented to the Associate Minister of Housing, Poto Williams, who oversees retirement village legislation. She will consult officials at the Ministry of Housing and Urban Development and decide whether to undertake a review, and if so, how and when it will proceed.