Louise Biti

The Federal Government’s Independent Review of Residential Aged Care Accommodation Pricing^[1] has endorsed the need for clearer boundaries between information and financial advice, with a recommendation that financial advice on aged care be limited to licensed advisers holding an aged care specialist designation.

It reinforces the findings of the recent white paper by Aged Care Steps^[2] on the regulation of aged care financial advice and supports the Financial Advice Association Australia’s (FAAA) aged care specialist designation.

Sarah Abood, CEO of the FAAA, said: “The recommendations would lead to a clearer, safer pathway for older Australians, enabling these people to make more effective aged care decisions. This is particularly critical as Australia’s population ages – the proportion of people aged over 85 is one of the country’s fastest growing demographics.”

The review highlights the challenges older people face in understanding the costs and financial impact of residential aged care accommodation, often leading to aged care providers and other unlicensed players being asked for information and guidance bordering on, and sometimes crossing into, personal financial advice.

It recognises that aged care providers, Aged Care Specialist Officers (ACSOs) and Financial Information Service (FIS) officers are limited to the provision of information, not financial advice. It also states that aged care providers must ensure their staff do not provide financial advice and that any information about aged care costs remains accurate and factual.

Louise Biti, director at Aged Care Steps, said that the report validates long-standing concerns about the risks created when aged care staff attempt to guide families through complex financial decisions.

“This report reinforces what our White Paper made clear – aged care financial advice must be delivered by registered financial advisers with specialist training. Aged care providers and FIS officers play an important role in providing information, but they need clear boundaries and safeguards to ensure they don’t inadvertently step into financial advice,” Biti says.

The Review also proposes a requirement for advisers to complete and maintain specialist training and qualifications to provide aged care financial advice. The Review specifically recognises the FAAA’s Aged Care Specialist designation, with education delivered through the Aged Care Steps Accredited Aged Care Professional program, and it calls on the Department of Health, Disability and Ageing to work with the FAAA to ensure advisers have access to accurate, up-to-date training.

Abood says: “We welcome the Review’s recognition of the FAAA Aged Care Specialist designation, with education provided by Aged Care Steps, and the call for a stronger focus on specialisations. This is essential to protecting older Australians and ensuring they receive high-quality financial advice on aged care. We would welcome the opportunity to work with the Department and Government to ensure aged care specialist designations are recognised appropriately in financial advice licensing requirements.”

Anyone seeking specialist aged care advice can use the FAAA Find a Planner service at https://faaa.au/find-a-planner/ and search for a licensed adviser who holds the Aged Care Specialist designation.

———

Notes:
[1] https://www.health.gov.au/resources/publications/independent-review-of-residential-aged-care-accommodation-pricing?language=en
[2] The Risk of Unregulated Aged Care Advice: Protecting Older Australians and Ensuring Quality Advice, Aged Care Steps Pty Ltd, January 2026

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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.

Read the paper.

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The new Aged Care Act will prioritise the needs of older people requiring aged care, according to the Federal Government. The Royal Commission into Aged Care found the current Aged Care Act was no longer fit for purpose as it focused on providers and how to fund them, rather than around aged people accessing services.

The residential aged care changes include introducing a new means-tested services contribution for residents entering care from 1 July 2025. Key changes include means-testing of the hotelling supplement, which was previously paid by the Government at $12.55 per day. There will also be an introduction of a 2 per cent a year exit fee on Refundable Accommodation Deposits (RADs) and a lowering of the asset threshold for maximum fees to $1 million from approximately $2 million.

Additionally, a new lifetime cap of $130,000 for the non-clinical care contribution (NCCC) will be implemented, or after four years in residential care, whichever occurs first. The Support at Home Program replaces Home Care Packages and Short-Term Restorative Care programs. The new program introduces eight levels of ongoing funding, ranging from $11,000 to $78,000 per year.

“These are significant changes to how the aged care systems worked in the past. Older Australians will need to navigate these new rules which are complex, so they will need to carefully manage their financial situation.

“For those considering entering aged care this year, it may be advantageous to enter before 1 July 2025, as existing residents will be grandfathered under the current rules,” Mr Robson says.

He stressed the need for financial advice under the new framework.

“The need for financial advice becomes more critical under the new rules as many people will need guidance on whether to pay upfront through a refundable accommodation deposit (RAD) or through daily payments (DAP). RADs, while refundable, now come with a 2 per cent annual retention fee for up to five years. 

“Selling or retaining the family home is another decision potentially impacted by these changes; retaining the home can offer pension benefits for two years post-admission to a care facility whereas selling it might affect means testing at a greater rate than that which previously applied,” he says.

The Australian Government introduced the Aged Care Bill 2024 to Parliament on 12 September 2024. The legislation passed both houses of Parliament on 25 November 2024 and will become the new Aged Care Act from 1 July 2025.

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Now entering its third year, the awards continue to recognise the amazing work of Australian financial advisers in the ever-growing field of aged care advice.

“These awards play an important role in drawing attention to and celebrating excellence in aged care advice. As individuals seek out financial planners to plan their retirement, we want them to know they are collaborating with some of Australia’s best advisers, recognised for their significant influence on the industry and their clients’ well-being,” said Louise Biti, Director of Aged Care Steps.

“We’re delighted to announce the 2024 finalists for both the Aged Care Adviser of the Year and the Aged Care Advice Program of the year and congratulate them all on this achievement,” continued Biti.

Advisers have been nominated under two categories:

• Aged Care Adviser of the Year
• Aged Care Advice Program of the Year

‘Aged Care Adviser of the Year’ recognises an individual adviser who is deemed to have demonstrated outstanding professional commitment in providing aged care advice to older Australians and their families.

The ‘Aged Care Advice Program of the Year’ category recognises an Australian adviser or financial services business that has actively advocated the promotion of aged care advice amongst their client base, referral networks, peers, or local community.

The 2024 awards were reviewed and assessed by an external panel of respected professionals comprising Phil Anderson, Sue Viskovic, and Andrew Inwood. The judges recognised the exceptional quality and calibre of the submissions and were also impressed by the volume of submissions received this year.

The 2024 Finalists are (in alphabetical order by first name):

• Aged Care Adviser of the Year
  • Belinda Veriton – RFS Advice
  • Brenda Will   Bruining Partners
  • Craig Phillips – Phillips Wealth Partners
  • Dean Winfield  – Planrite Advice Group
  • Joe Formica   Progressive Financial Solutions
  • Katie Spence – Sage Care Advice
  • Robyn Clelland  – Corso Provate Wealth (Nanna’s Planners)
  • Robyn Clelland – Muifield Financial Services

• Aged Care Advice Program of the Year
  • Alteris Financial Group
  • Muirfield Financial Services
  • Phillips Wealth Partners
  • Story Wealth Management

Aged Care Steps will be announcing the winners of the awards on 21 November 2024.

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Understanding of the complexities of aged care advice, viewed through a consumer protection and compliance lens.

Introduction

The burgeoning aged care sector is one that financial advisers – directly or indirectly – will increasingly come into contact with. As our population ages, and longevity improves, most advisers will have a number of clients who are either using aged care services themselves, or who are making decisions about aged care on behalf of their parents or grandparents.

Planning for, and eventually funding, aged care costs can incredibly complex, involving life changing financial decisions in areas such as:

• superannuation
• taxation
• health care
• Centrelink
• cashflow, and
• estate planning.

The need for expert advice is clear.

But advice relating to funding aged care services is currently unregulated, leaving a variety of unqualified and potentially conflicted stakeholders – think estate agents, aged care service providers and finance brokers – free to provide services called ‘aged care advice’. Critical to their ability to do this to avoid giving financial product advice, and at first glance, as aged care services are not classed as a financial product, this seems reasonable. And yet as we will explore below, making recommendations about funding aged care from one or more vehicles that are classed as financial products may well see a line being crossed.

In this article, we will explore aged care advice through a consumer protection lens, including:

• the nature of aged care services
• funding options and considerations
• the definition of financial product advice, and
• consumer protections available to retail financial advice clients.

What do we mean by ‘aged care’?

A common expression when discussing aged care is to say that someone is ‘in aged care’, the use of which implies we are talking about people living in dedicated aged care residences. Yet residential aged care is only one of three main categories of aged care assistance, and while the number of Australians in residential aged care is growing strongly, it still represents a minority of aged care being provided.

Types of aged care

According to the Australian Institute of Health and Welfare^[1], there are three main types of aged care:

• Residential aged care provides accommodation and care at a facility on a permanent or respite (temporary) basis. Permanent care is intended for those who can no longer live at home due to increased care needs, while respite provides a break from normal living arrangements.
• Home support (Commonwealth Home Support Programme) provides entry-level support at home for people as well as their carers. Services available through home support include domestic assistance, personal care, social support, allied health and respite services.
• Home care (Home Care Packages Program) provides different levels of aged care services for people in their own homes. It is targeted towards people with needs that go beyond what home support can provide. Ongoing services are available to keep people well and independent (such as nursing care), stay in their home (through help with cleaning, cooking and home maintenance) and remain connected to their community through transport and social support.

Usage of these services

Australian Government data^[2] as of 30 June 2023 revealed:

• around 193,00 Australians were using permanent or respite residential care, and
• 258,000 were using home care.

Over the 2022/23 financial year, over 816,000 people received home support.

In line with our ageing population, these numbers will increase dramatically, with experts projecting the above numbers to almost triple by 2050, when it is estimated 3.5 million Australians will be accessing the various types of aged care service³.

Self-funding aged care

Aged care funding rules are complex.

While the Government fully subsidises aged care costs for people whose main income source is the aged pension, a number of social security thresholds and tests come into play, meaning that the sale of the home becomes a critical financial decision. It also means that the same person can pay different amounts for aged care services depending on how their finances are structured, making expert guidance imperative.

Costs vary, based on the level of care required and the type of care a person is assessed as eligible for.

• A Home Care Package consists of the federal government contribution (the subsidy) and the individual’s contribution.
  1. Fees includes a basic daily fee, an income-tested care fee and additional fees. Fees vary by level of care needed.
• Residential aged care can involve several types of fee, including:
  1. Basic daily fee paid direct from the government to a provider
  2. Means-tested care fee (government subsidised)
  3. Accommodation (government subsidised)
  4. Extra services and additional services fees (not subsidised)

While accommodation fees can be paid on an ongoing basis (like a rental), many choose to pay in advance, via a Refundable Accommodation Deposit (RAD). The RAD is fully refundable to the resident when they leave the provider or is returned to the resident’s estate if they pass away.

While the average RAD in Australia is around half a million dollars, they can vary greatly depending on the individual provider and location. RAD’s exceeding $2 million are not unknown.

How do people pay for their RADs?

The financial stakes are obviously very high, and it is clear that to fund their aged care costs, especially RAD’s, most individuals will need to access amounts from within their savings and wealth holdings, which could include:

• their home
• investments including investment properties, shares, and managed funds
• term deposits, and
• superannuation.

Most of these options clearly involve financial products, and with 2024 Aged Care Taskforce report^[4] recommending those with the means make a bigger contribution towards their own aged care costs, structuring and accessing funds from these options will become an even more critical issue, making expert advice increasingly essential.

Unlicensed aged care advice – how it exists

The Corporations Act 2001 does not specifically capture advice regarding aged care accommodation as financial product advice.

Section 766B of the Act^[5], defines the meaning of financial product advice, personal advice and general advice thus:

“Financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that:

1. is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or
2. could reasonably be regarded as being intended to have such an influence.”

Section 763A of the Act^[6] defines a financial product as:

“A financial product is a facility through which, or through the acquisition of which, a person does one or more of the following:

1. makes a financial investment
2. manages financial risk
3. makes non-cash payments.”

At the moment, Refundable Accommodation Deposits are not regarded as being captured by the definition of financial product, allowing aged care advice to be given without an AFS licence, provided the advice is restricted to information and advice about fees and services in aged care, and, if financial products are discussed, that discussion is restricted to factual information only.

While a person providing credit advice and products must hold an Australian credit licence, advice about buying or selling property – including the family home – is exempt from both the Australian Financial Services (AFS) and consumer credit licensing provisions.

Similarly, the provision of information about Centrelink is not limited to licensed financial advisers

All of which means there are plenty of ways an individual can set out their shingle as an

‘Aged Care Adviser’ without the need to be a licensed, registered financial adviser.

The question is, given the increasing number of people needing aged advice, and with Australia’s 16,000 financial advisers already stretched and overworked, is this such a bad thing?

Consumer protections forfeited under the current framework

A number of consumer protections are afforded to individuals when talking to licensed financial advisers about financial products.

On the product side, protections include:

• the design and distribution obligations (DDO) regime, which requires financial product issuers to identify a target market for their financial products and take reasonable steps to ensure that distribution of those financial products to retail clients is consistent with that target market
• various obligations that AFS licensees must comply with (as responsible entities of schemes with retail investors must hold an AFS licence), including the requirement that licensees have an appropriate internal dispute resolution system to deal with complaints from retail clients, and membership with the Australian Financial Complaints Authority (AFCA)
• entitlements to receive financial product and service information disclosure such as a Product Disclosure Statement (PDS) or a Financial Services Guide; and
• a range of protections under Ch 5C of the Corporations Act that apply to registered schemes (where registration is generally required when retail clients are scheme members), including the duty for the responsible entity of a registered scheme to act in the best interests of scheme members.

On the advice side, retail advice clients also benefit from significant additional protections under the Corporations Act when receiving financial advice, including requirements for advisers to:

• act in the best interests of their client (s961B);
• ensure their advice is appropriate (s961G);
• give priority to their client’s interests where there is a conflict of interest (s961J); and
• in many cases, and potential QAR changes notwithstanding, give a retail client a statement of advice (s946A).

Financial advisers are also required to have Professional Indemnity Insurance, affording clients a measure of confidence when seeking financial remedies if advice contains errors, or the adviser was negligent.

Why these protections are especially important with older clients

By definition, the vast majority of people entering residential aged care are older (the exception being some young people who live in aged care in the absence of dedicated facilities).

Indeed, 76.5% of people in residential aged care are aged 80 and over^[7].

This brings a range of issues into focus, including diminished mental and physical capabilities, and conditions like dementia.

Elderly Australians are more likely to use instruments such as Enduring Powers of Attorney, which can put important financial and care decisions in the hands of those holding those powers.

While this is normally caring and loving family members, it does raise the spectre of elder financial abuse. The cost-of-living crisis, rising housing costs, and evolving family structures have made the ‘impatient inheritor’ phenomenon real, and many older Australians may find themselves under pressure from their younger family members, to either sell their home and other assets. The application of the various income and assets tests means these decisions can have major ramifications for the cost of aged care, and in turn the quality of care that is affordable.

Is unlicensed aged care realistic?

Mindful that many accountants may find themselves advising clients about aged care, the CPA issued a Guidance Note^[8] to its members on the topic. The note is instructive as it highlights the types of questions asked about aged care, and the ways to provide guidance without straying into the realm of financial advice.

The questions they believe their members could expect include:

• What options are available for aged care?
• What are the potential costs?
• What alternatives are there for paying the Accommodation Payment?
• Should I retain sell or rent the family home?
• Will my social security entitlements be affected by my choices?
• Will I have enough cash flow to sustain aged care costs?
• Are there any strategies to reduce costs?
• Could it impact my estate planning?

The Guidance Note goes on to describe the types of advice that can be provided on an unlicensed basis:

While the CPA guidance is absolutely correct, it does beg the question as to how realistic it is – in the context of discussions about how to fund a RAD of $500k or more – to provide effective advice that doesn’t involve discussions about financial products, or doesn’t recommend a course of action such as selling the family home.

Even in the event that an aged-care adviser can stay on the right side of the law, one has to question how effective that advice can be, given the factors that should be taken into account.

The complexity of aged care leaves most clients confused

2021 research by National Seniors Australia^[9] revealed that planning for aged care was relatively uncommon and there was a great deal of confusion about aged care costs and their own obligation to contribute.

According to their research, approximately one-third of Australians 65 and older use some form of age care services, only 14% of seniors had planned for aged care costs. In the majority of cases, this was because respondents didn’t know enough about them to actually plan. Indeed, a previous National Seniors report^[10] showed 80% of people did not understand consumer contributions to aged care.

While the Government pays for the lion’s share of aged care costs, people still have to pay for services depending on their income and/or assets. There are many fees and charges, co-payments and deposits that are in place which people are understandably ignorant about until they need to access care.

The danger is that many care recipients will be caught off guard by these unplanned costs and may either struggle to access the right level and quality of care, or they feel pressured, and rush into making big financial decisions without truly independent, expert guidance.

So back to the question, is unregulated aged care advice a problem?

Not all decisions relating to aged care are financial ones, but those that are involve major, life-changing amounts. Complex decisions about the interplay between home ownership, Centrelink, superannuation, estate plans, and cash flow need to be made, and many of these decisions will be hard to undo.

While it is legally permissible to offer aged care advice outside the realms of licensed financial advice, it seems likely that such advice would be very superficial. It would also not be accompanied by the various consumer protections afforded people when dealing with financial products, and with licensed financial advisers. Arguably, these protections are more important for older, possibly more vulnerable, Australians than for others.

Calls to regulate aged care advice are frequent. As far back as 2016, The Council on the Ageing (COTA) argued that aged care financing should be considered a financial product, thereby requiring advisers to obtain a financial services licence from ASIC.

“Aged care financing is not a financial product and is not governed by ASIC. We are pressing for that to change. We will pursue whoever is next in government to change that provision,” COTA chief Ian Yates said at the time^[11].

More recently the topic was in the news when Aged Care Steps called for the sector to be regulated, and announced an industry consultation to bring more focus and attention on the issue.

The firm said that though aged care advice is an inherently complex area, unlicensed and unregulated businesses and services are increasingly providing this financial advice on aged care. According to them, 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-informed¹².

“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 director Louise Biti.

“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, she said.

Summary

The aging population is driving an increased demand for aged care services, presenting significant financial planning challenges. Funding aged care is complex, involving superannuation, taxation, health care, Centrelink, cash flow, and estate planning. Despite the need for expert advice, aged care advice is currently unregulated, allowing unqualified stakeholders to provide guidance without a financial services license. This situation poses a consumer protection challenge, as decisions about funding aged care often involve financial products.

The three main types of aged care in Australia are residential aged care, home support, and home care, with usage projected to rise significantly. Self-funding options typically involve substantial financial assets, necessitating expert advice. Current unlicensed aged care advice lacks the consumer protections afforded by licensed financial advice, raising concerns about the quality and safety of such advice.

Calls for regulatory reforms are increasing, with the aim of ensuring all aged care advice is comprehensive, legally compliant, and prioritises consumer interests.

———–

References:
[1] https://www.aihw.gov.au/reports/older-people/older-australians/contents/aged-care
[2] https://www.gen-agedcaredata.gov.au/topics/people-using-aged-care#Aged_care_use_by_age
[3] https://www.aph.gov.au/About_Parliament/Parliamentary_departments/Parliamentary_Library/pubs/BriefingBook44p/AgedCare#:~:text=Significantly%2C%20by%202050%20an%20estimated,of%20services%20available%20to%20them.
[4] https://www.health.gov.au/resources/publications/final-report-of-the-aged-care-taskforce?language=en
[5] https://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s766b.html
[6] https://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s763a.html
[7] https://www.gen-agedcaredata.gov.au/topics/people-using-aged-care#Aged_care_use_by_age
[8] https://www.cpaaustralia.com.au/-/media/project/cpa/corporate/documents/tools-and-resources/financial-planning/guidance-note-advising-on-aged-care-20-feb.pdf?rev=3b8d33bb25aa45c0bf43571e5ed833c7
[9] https://nationalseniors.com.au/uploads/Planning-for-care-costs-24.8.21.pdf
[10] https://nationalseniors.com.au/uploads/09183073PAR-RBD18-ResearchReport-AgedCareLiteracy-Web.pdf
[11] https://www.afr.com/companies/healthcare-and-fitness/call-for-aged-care-financial-advice-to-be-regulated-by-asic-20160617-gpllly
[12] https://www.ifa.com.au/news/34086-aged-care-steps-flags-worrying-trend-of-unlicensed-aged-care-advice

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Despite the Aged Care Taskforce delivering its final report (on aged care financial viability and reform) in December 2023, the Government has delivered another Budget that has avoided making decisions around funding aged care for long-term viability.

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Louise Biti

Industry leader Aged Care Steps has launched a significant consultation project that explores how older Australians and their families access financial advice to support their aged care decisions.

Driven by a commitment to ensure that aged care advice is provided in the best interests of older Australians and their families, the project, centred on a discussion paper and stakeholder research, was launched after a worrying trend emerged.

Despite the strategic and financial complexity inherent in aged care advice, financial advice on aged care is increasingly provided to older Australians by unlicensed and unregulated businesses and services. The outcome is leading to a prevalence of superficial, often conflicted advice, no regulatory oversight, and a lack of essential consumer protections, which may 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 Louise Biti, Director of Aged Care Steps.

“Moreover, aged care legislation, choices and costs associated with aged care are constantly changing, enhancing the difficulties with planning and education.”

“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. 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,” continued Biti.

Personal advice, which leads to investment into specific financial products, is clearly regulated under the Corporations Act 2001 as personal advice; however, a range of contrasting views exist about personal advice on aged care, which focuses on strategic outcomes, albeit strategic outcomes which include advice on financial products including basic deposit products.

The discussion paper explores whether individuals and organisations who provide aged care financial advice should be authorised under an Australian Financial Services License (AFSL) and comply with financial advice laws, regulations and ethical codes.

Alongside the discussion paper, the consultation project will include research with key stakeholders within the financial services sector, aged care sector and other connected support areas as well as older Australians and their families.

Participation in this survey-based research is encouraged from the following groups/individuals:

• AFSLs and advice providers including financial planners, accountants, and lawyers.
• Aged care service providers including care providers, placement services, peak bodies, and social workers.
• People accessing care services including individuals, carers, families and consumer groups.
• Relevant industry individuals and groups such as Members of Parliament and regulators.

Stakeholders can read and review the discussion paper, and share their insights via the survey on the Aged Care Steps website. The consultation period will run until 5.00 pm (Sydney time) on 10^th of May, 2024.

Once the consultation has ended, Aged Care Steps will prepare 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.

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Louise Biti

The Government released the final report from the Aged Care Taskforce on Monday 11 March.

Louise Biti, Director at Aged Care Steps said, “this much-anticipated report recognises the demographic changes driving the increasing demand for quality aged care services.” Current and future generations have high expectations for quality aged care with greater choice and more control.

The Federal Government is the major funder of aged care. However, there is a limit to their ability to support the increase in costs needed in the future. Government spending on aged care as a proportion of gross domestic product (GDP) is projected to grow from 1.1% in 2021–22 to 2.5% by 2062–63.

A specific tax or levy to fund aged care was ruled out in the report, in favour of increased user-pays contributions for people with financial capacity. “The Taskforce realises that generally older people are wealthier than previous generations and should consider accessing their increasing superannuation and property assets to fund their aged care needs.” But this should continue to be underpinned by a strong safety net for low-means participants to meet aged care costs.

Biti added “The taskforce recommendations could result in significant changes to the decisions for funding aged care services, creating increase confusion and concern for clients trying to navigate the impact on their personal circumstances”.

“A number of the recommendations encourage Australians and their families to plan ahead for aged care and consider their aged care needs earlier in retirement” explained Biti. “Financial advisers have the opportunity to educate clients and encourage pre-planning for aged care as part of ongoing retirement advice” added Biti.

“These developments reiterate the importance and value of personal aged care advice and highlights the need for all advisers to have an aged care advice solution in place for clients”. Biti concluded.

Key recommendations from the Taskforce include:

• Immediately increasing the $550,000 cap that limits providers charging a higher RAD (Refundable Accommodation Deposit) without approval from the Independent Health and Aged Care Pricing Authority – an option was put forward as a first step to increase the cap to $750,000 in line with the Tune Report recommendation in 2017.
• Allowing providers to deduct and retain 3% of the RAD for a limited number of years to create greater alignment between the lump-sum RAD and the rental-like equivalent DAP (Daily Accommodation Payment)
• Phasing out RADs by 2035, moving to just a rental model.
• Adding an additional supplement to the basic daily fee to cover the costs paid by providers for hotelling services (ie food, utilities, laundry etc). It is suggested this should be paid by Government for residents who receive an age pension, but in all other cases to be paid by the resident.
• Allow providers and residents to negotiate a higher basic daily fee for higher quality services.
• Charging varying fees for Home Care services based on the type of services accessed.
• Expanding government funding to fully cover the cost of care while residents pay a greater contribution towards accommodation and daily living expenses. However, if the Government chooses not to fully fund the care component, the Taskforce indicated that annual caps on the means-tested fees could be removed and the lifetime cap be reviewed.

It is important to note, that these recommendations are just contained in the Taskforce’s report. The Government has not yet confirmed which recommendations (if any) they will accept, except to confirm ruling out a specific levy or increasing taxes to cover the cost of aged care. They have also indicated they do not plan to change the means-testing of the family home.

“All eyes will be on the May Federal Budget, when it is anticipated that the Government will formulate its response and proposed changes” concluded Ms Biti.

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Bruce Baynes

Industry leader Aged Care Steps has launched the 2023 ACS Aged Care Adviser of the Year Awards.

Following the success of their inaugural awards last year, Aged Care Steps is delighted to continue these awards to recognise the great work advisers achieve in this increasingly important advice area.

“These awards set a benchmark for aged care advice excellence when we launched them last year. Promoting recognition of adviser excellence and the importance aged care advice holds in financial planning is critical.

Aged care advice ensures that clients have more choices and greater control as they move through retirement, and celebrating the best advisers in our industry helps recognise the positive impact they have on their client’s lives,” said Louise Biti, Director of Aged Care Steps.

There are two categories under which advisers can nominate themselves or another adviser:

• Aged Care Adviser of the Year
• Aged Care Advice Program of the Year.

The first category recognises an individual adviser who is deemed to have demonstrated outstanding professional commitment in providing aged care advice to older Australians and their families.

Bruce Baynes from Sage Care Advice, Winner of the 2022 Aged Care Adviser of the Year said: “Being recognised as the inaugural winner of the ACS’s Aged Care Adviser of the Year, was more than a trophy or an accolade of achievement, for me it was confirmation that we are fulfilling a need and making a difference in people’s lives.”

The second category recognises an Australian adviser or business working in financial services that has actively advocated the promotion of aged care advice amongst their client base, referral networks, peers or local community.

Andrew Biviano, Alteris Financial Group, Winner of the 2022 Aged Care Advice Program of the Year said: “The award was a wonderful acknowledgement that reinforced our commitment to the benefits of having a specialised aged care division. This recognition underscores our multifaceted approach, which includes offering tailored financial guidance to clients to instil confidence in their decision-making, consistently sharing our expertise with aged care facilities to emphasise the value of financial advice, and exchanging insights with fellow financial planners to empower them in supporting their clients effectively.”

Applications will be reviewed and assessed by an external panel of respected professionals, who will be announced in the coming weeks.

Full details of the Awards and the nomination and application processes are available on the Aged Care Steps website.

Applications close on Monday 6th November at 6.00pm Sydney daylight savings time.

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Assyat David

No news is good news. For clients accessing aged care, that might be the view of this year’s Federal Budget.

Clients accessing aged care services have avoided an increase in aged care fees, despite the government needing to find an additional $11.3 billion over the next four years to fund the 15% increase in award wages for 250,000 aged care workers. However, the Budget commentary did signal a potential for client contributions to be reviewed and adjusted when the new Aged Care Act is introduced on 1 July 2024.

Other measures announced in the Budget continued to show the Government’s commitment to ongoing aged care reform, in line with the Royal Commission findings and commenced in 2021 by the previous Federal Government.

Pay increases for aged care workers

The Government has committed to funding the 15% award wage increase decided by the Fair Work Commission. The increase will apply from 1 July 2023 for registered nurses, enrolled nurses, assistants in nursing, personal care workers, head chefs and cooks, recreational activities officers (lifestyle workers) and home care workers.

Increases to wages will be funded through Government subsidies, including:

• an increase in the AN-ACC funding for residential care,
• a new $10.80 ‘hotelling’ supplement to cover chef and cook wages as well as catering, cleaning and gardening services
• an increase in the Home Care Package budgets, and
• additional grants for Commonwealth Home Support Program.

Care providers will be monitored to ensure the additional revenue is passed onto aged care workers.

Review of funding arrangements – new taskforce

A new Aged Care Act is planned to be introduced from 1 July 2024, so decisions on any changes to client contributions for care services appear to have been deferred and may potentially coincide with commencement of the new Act.

A new Aged Care Taskforce has been established to review funding arrangements for aged care and provide suggestions on options that are fair and equitable for all Australians. This will take into consideration the Royal Commission into Aged Care Quality and Safety recommendations, and focus on:

• client contributions to ensure a sustainable aged care system
• equity for older people who need aged care now and into the future, and for all those contributing to funding through taxes
• innovation and enhancing elements of the system that Australians value.

The Government recently paid $396,000 to Kantar Public Australia (political consultants) to look into client contributions towards the cost of aged care and client knowledge of the relevant policies. The findings are still being reviewed by Government and may impact future decisions.

Reduced residential care ratios

Government funding in residential aged care is regulated by imposing a national target provision ratio of subsidised residential care places.

To create a savings of $2.2 billion, the Government will temporarily reduce the ratio from 78.0 places per 1,000 people over age 70 to 60.1 places, over 3 years from 2024-2025. As shown in the graph below, the ratio has been reducing over time and reflects the increasing preference of older people to remain at home.

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