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Call to tighten licensing of aged care advice

Mike Taylor10 April 2024
Old couple walking on pile of coins, businessman behind them on other pile of coins

Getting aged care advice more tightly and uniformly governed under the Australian Financial Services Licensing (AFSL) regime is being canvassed under an industry consultation initiated by specialist aged care consultancy, Aged Care Steps (ACS).

ACS director, Louise Biti says she believes a unified position needs to established around the need for aged care advice to be licensed with a view to then taking that position to Government.

“We believe it needs to be licensed and it needs to be delivered under an AFSL,” she told Financial Newswire.

“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.”

Asked what particular areas of the aged care sector were particularly problematic, Biti pointed to advice handed out by aged care providers and even placement services personnel but also mentioned former financial advisers some of whom carried conflicts of interest.

Flagging the consultation, Aged Care Steps said it was exploring how older Australians and their families access financial advice to support their aged care decision with the aim of ensuring older Australians have access to affordable quality advice in a safe and regulated environment.

“Strategic and financially complex aged care advice is increasingly provided to older Australians by unlicensed and unregulated businesses and services. These outcomes risk 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.”

“This area needs to be examined to be better understood. A key issue to explore is whether individuals and entities who provide aged care financial advice need to be authorised under an AFSL and comply with financial advice laws, regulations and ethical codes. And how to ensure advice is delivered in an affordable and accessible way.

The ACS statement said the firm’s focus is on ensuring that aged care advice is provided in the best interests of older Australians and their families, not only on day one of their aged care need but throughout their entire care period as well as the impact on families afterwards.

The Aged Care Steps consultation is aged at financial advisers, lawyers, accountants, aged care providers, placement services and consumer groups.

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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Jason Gordon
27 days ago

I’d be interested in understand if the scope of this project also includes the unlicensed financial advice given by nursing homes using calculators like Resident Select …and just to really niggle ….. how does the new Aged Care Specialist Officers (ACSO’s) at Centrelink fit into this?

Been around
27 days ago
Reply to  Jason Gordon

General vs Personal advice – i think you can give clients the details/numbers in those calculators and the ASCO’s – but advising them to sell a home, or draw down super or maybe not and pay the DAP/DAC. I think you should be licensed to give this specific advice

No Advice Required
27 days ago
Reply to  Been around

Ahh the old property advice issues, big issues.
Isn’t it wonderful that a lot of peoples biggest Asset, Home and or Investment Properties are NOT Financial Products. And of course Real Estate Agents can be involved in massive COMMISSION Charges, again not a Financial Product.
Note advice on a property, i.e. to sell a home or not, is NOT Financial Advice.
And paying off a RAD or NOT is also NOT Product Advice.

one foot out the doora
27 days ago

I’m sure age care needs more regulations and compliances. It will drive the six planners in the country that do it out of it.

Been around
27 days ago

I’ve heard of Real Estate Agents advising people that are moving to aged care to sell the house, where this increases their MTF and they lose they lose the age pension and probably wasn’t the best advice. We need to protect the vulnerable. There is lots of cash around and the people moving into aged care are forced into rushed decisions. At least under AFSL there will be some protections given to the vulnerable

No Advice Required
27 days ago
Reply to  Been around

Of course the Real Estate Agent is going to Recommend to SELL the HOUSE.
How else will they make their 10’s of Thousands or more in Commissions for each sale if they say Don’t Sell.
No conflicts of Interest of Course from the Real Estate Agents : – )

simon
25 days ago

So only Financial planners should be able to give advice on aged care? Just this week i have seen 2 clients who went and paid $4,5000 and $7,000 respectively to a financial planner for aged care advice. Both planners claimed to hold specialist accreditation in aged care. After seeing the planners and receiving 60 page SoA’s still, neither client knew what a means tested fee was.
Following our meeting both clients claimed that none of the information we provided had been offered by the Financial planner. Both clients however knew in minute detail (recorded in a 60 page SoA) all the information about the financial investment portfolio recommended by the planner to their 89 and 95 year old parents as well as the $4,400 and $6,600 ongoing fee to manage that portfolio. No conflict of interest there though?
Perhaps a good argument why Financial planners should be banned from giving advice about Aged Care? Of course not, however a valid argument that their advice should not in anyway involve the recommendation of financial products. Advice on such matters can be offered separately at a separate cost.

bemused
25 days ago
Reply to  simon

You’ve highlighted what would happen if Aged Care Advice is tossed into an over-regulated environment. I suspect they did a risk profile questionaire on the 95 year old too.

bemused
25 days ago

Whilst training providers like Louise stands to gain financially, at what cost will that additional regulation have on Australians?

Surely Advisors can agree and attest that the only thing more regulation, more red tape, more Government intervention leads to is only 15,000 advisers, Advice being unaffordable, and Super funds providing Advice in a call centre via backpackers.

Yes, I appreciate there are a few rouges around,(perhaps I’m one) but as a licensed Adviser now, I can provide factual, educational, comparative information, that does not involve any product advice in the form of a letter to the client. That letter, for a fee, is based on 1-5 hours work at an hourly rate of $335. If this becomes a Statement of Advice, and with a stoke of a pen, falls under “product advice” and the other 22 pieces of legislation including AML/CTF then it becomes unaffordable.