Assyat David
Older Australians and their families are at significant risk of receiving “conflicted, inconsistent and inaccurate” advice on aged care from the growing number of unlicensed providers, exposing them to serious financial harm, due to gaps in the regulation of financial advice, according to a new paper from Aged Care Steps.
Titled, The risk of unregulated aged care advice: Protecting older Australians and ensuring quality advice, the report urges the government, regulators and broader advice industry to make a clear distinction between personal advice and information in relation to aged care funding, citing a proliferation in “advice errors” given by Services Australia, aged care providers and other unlicensed players.
The paper identifies five major issues with how aged care advice is currently provided in Australia and makes five recommendations to strengthen consumer protections.
The recommendations are:
- Clarify aged care financial advice as Personal Financial Product Advice under the Corporations Act and require providers to be authorised under an Australian Financial Services Licensee (AFSL);
- Enhance regulation and enforcement by strengthening the Australian Securities and Investments Commission’s role in overseeing aged care financial advice;
- Improve identification of licensed advisers by introducing financial planning specialisation categories, including aged care funding advice, on the Financial Advisers Register (FAR);
- Launch a public campaign to educate consumers about value of licensed financial advice and how to find a licensed adviser; and
- Explore ways to improve the affordability and accessibility of aged care advice, such as through subsidises or new service models.
According to Assyat David, Director of Aged Care Steps, the current system lacks clear guidance and regulatory oversight, raising concerns about the quality and consistency of advice available, and the heightened potential for elder abuse.
“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 their families,” David said.
“This grey area of unregulated advice poses significant risks to consumers and highlights the urgent need for clearer guidelines and stricter regulations.”
“Without proper consumer protections, older Australians are at risk of making inappropriate decisions that could have serious financial and estate planning consequences.”
Louise Biti, Director of Aged Care Steps, added that addressing challenges in aged care financial advice was not just a matter of individual well-being but public policy concern.
“Aged care advice should only be provided by financial planners that have the necessary expertise and are authorised under an AFSL and, therefore, comply with relevant laws, regulations, and ethical standards,” Biti said.
“This approach would strengthen consumer protections due to the requirement for authorised advisers to act in their client’s best interests, meet minimum education and competency standards, and carry professional indemnity insurance to ensure compensation in cases of professional misconduct and participate in an external complaints resolution body. Unlicensed providers do not offer these protections.”
The Aged Care Steps report is based on extensive stakeholder consultation and considers academic research and international comparisons. It also features insights from a survey of over 90 participants in the aged care sector.