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Office of Aged Care Quality and Compliance (OACQC)

Aged Care Accommodation Bonds - Disclosure Standard - information for approved providers

Information sheet for aged care accommodation bonds advice for approved providers on changes from 1 October 2011.

You may download this document in PDF format:

PDF printable version of Disclosure Standard - information for approved providers (PDF 258 KB)

Why change the Disclosure Standard?

From 1 October 2011, there are clearer and stronger arrangements to protect residents’ savings held in the form of accommodation bonds (bonds). The arrangements clarify the intended purpose for bonds as a source of capital for investment in aged care infrastructure. They also improve governance arrangements for bonds and provide greater transparency and accountability for bonds. This will improve consumer confidence in the aged care sector by assuring residents that their funds are being used for intended purposes and that their bond balances will be refunded when they fall due.

In order to enhance transparency, accountability and consumer confidence, the disclosure requirements now include reporting on how approved providers use bonds. However, most disclosures to residents are now ‘on request’ which reduces the overall reporting load. Disclosure to the Department of Health and Ageing (the Department), will continue through the Annual Prudential Compliance Statement (APCS).

These changes are part of the More Support for Older Australians in the National Health and Hospitals Network (2010-11 Budget Measure) and have been developed in close consultation with the aged care industry, consumer groups and the financial services sector.

Disclosure to residents, prospective residents or their representatives

Amendments to the Disclosure Standard require approved providers to disclose some additional information to residents, prospective residents or their representatives. The changes remove the requirement to provide detailed information to residents and their representatives automatically. Most information is to be provided on request, reducing the overall regulatory burden. The only information required to be disclosed annually to residents or their representatives is the resident’s entry in the bond register and a statement about the additional information that is available on request.

On request

Additional information required to be provided to residents, prospective residents or their representatives on request is:

• a summary of the permitted uses that bonds have been used for in the previous financial year
• if bonds have been invested in financial products other than through authorised deposit-taking institutions, a statement explaining the approved provider’s investment objectives and the asset classes they may invest in (applicable from 1 February 2012)
• information about whether the approved provider has complied with the prudential requirements (including from 1 February 2012, the Governance Standard) and permitted uses for bonds.

On request, approved providers must also provide residents, prospective residents or their representatives with the following information that was previously required to be given to all residents who had paid accommodation bonds:

• a copy of the independent audit opinion of the APCS from the previous financial year
• information about the number of bond balances that were not refunded in accordance with the Aged Care Act 1997 (the Act) or, for entry contributions, a formal agreement
• the most recent audited accounts or, if the service is part of a broader organisation, the statement relating to the aged care component
• (if the resident has already paid a bond) a copy of the resident’s entry in the bond register, current at the time of the request.

Approved providers are required to provide the above information to residents, prospective residents or their representatives within seven days of a request being made. The information must be correct at the time the request was made.

Approved providers should not need to generate additional information to meet these requirements. The information needed should already have been created when documenting the APCS and governance system (see information sheet Governance Standard — information for approved providers).

On entry

Within seven days of entering into a bond agreement, approved providers must provide the resident or their representative with:

• a copy of the bond agreement
• a written guarantee of refund of the accommodation bond balance
• a written statement explaining what other information is available on request — see the Attachment for a statement that the Department considers to be compliant with this requirement. Approved providers may, however, draft their own statements.

Annually

Within four months of the end of the financial year, approved providers must provide each resident or their representative with:

• a copy of the resident’s entry in the bond register
• a written statement explaining what other information is available on request — see the Attachment for a statement that the Department considers to be compliant with this requirement. Approved providers may, however, draft their own statements.

Legislative Reference: Sections 23.42 and 23.43 of the User Rights Principles 1997

More Details: Protecting Residents’ Savings – a guide to the arrangements for accommodation bonds from 1 October 2011 and the information sheet Governance Standard — information for approved providers.
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Disclosure to the Department

Disclosure to the Department is through the existing APCS, which now requires disclosure of compliance with the Governance Standard and expenditure on permitted uses (see the information sheet Governance Standard — information for approved providers).

From the 2011–12 financial year

APCS Cash flow statement - Information required in the APCS includes a cash flow statement designed to provide the Department with indicators of potential non-compliance with the permitted use provisions. To minimise the regulatory burden and allow approved providers to, as much as possible, utilise existing financial information they generate, reporting will be on expenditure for permitted uses from any funding source (not just bonds).

The cash flow statement must include:

• the total value of bonds received during the financial year (incoming/deposit amounts)
• the total deducted from bonds received during the year (retention amounts)
• the amount returned to the approved provider from the sale, disposal or redemption of permitted financial products that the approved provider invested in after 1 October 2011
• amounts (whether or not obtained from bonds) spent on permitted uses as defined by the Act, including:
  • capital expenditure
  • financial products (deposits with authorised deposit-taking institutions)
  • financial products (others)
  • loans
  • refunding bond or entry contribution balances
  • repaying debt accrued for the purpose of capital expenditure or refunding bond balances
  • repaying debt accrued before 1 October 2011, where debt was accrued for the purposes of providing aged care
  • meeting business losses incurred in the first 12 months of receiving residential or flexible care subsidy in respect of a service.

Approved providers may choose to disclose this information in their General Purpose Financial Report. This will be taken as having met the Department’s reporting requirements.

Other requirements - In addition to the information required in previous APCS, approved providers will also be required to disclose in their APCS:

• the minimum level of liquidity identified by the liquidity management strategy
• a statement about whether the approved provider has, in the previous financial year, complied with:
  • the Governance Standard (see separate information sheet, Governance Standard — information for approved providers)
  • permitted use requirements
  • transitional arrangements (if applicable).

Legislative Reference: Subsection 23.40(1) of the User Rights Principles 1997

More Details: Protecting Residents’ Savings – a guide to the arrangements for accommodation bonds from 1 October 2011 and the information sheet Governance Standard — information for approved providers.

When do the changes take effect?

Most of the amendments to the Disclosure Standard come into effect from 1 October 2011. Disclosure to residents, prospective residents or their representatives regarding investments in financial products is not compulsory until 1 February 2012.

Compliance

The Department is committed to robust compliance monitoring to protect residents’ savings and assist approved providers to deliver high quality aged care services. While the immediate focus is on assisting approved providers to prepare for and comply with the new arrangements, existing regulatory powers will continue to apply and may be used where appropriate.

More information

Protecting Residents’ Savings – a guide to the arrangements for accommodation bonds from 1 October 2011 has been produced to cover the new requirements. It is available on the Department’s website at www.health.gov.au.

Information sheets: Protecting residents’ savings — information for approved providers and Governance Standard — information for approved providers are also available on the Department’s website.

All Commonwealth legislation is available on the ComLaw website at www.comlaw.gov.au. Prior to 1 February 2012, amendments that commence on that date can be found in Schedule 2 to the User Rights Amendment Principles 2011 (No. 3) on the ComLaw website.

For more information, call 1800 200 422 or email: prudential@health.gov.au.
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Attachment

This statement is taken by the Department of Health and Ageing to be a statement that complies with paragraphs 23.42(1)(c) and 23.42(2)(b) of the User Rights Principles 1997.

Disclosure Statement

Information you are entitled to

[insert approved provider’s name] is the approved provider for [insert the name of the service]. Under the Aged Care Act 1997 (the Act), residents and prospective residents or their representatives are entitled to receive particular information from their approved provider on request.

This includes, in relation to the previous financial year:

• a summary of the permitted uses for which we have used accommodation bonds
• information about whether we complied with the requirements for permitted uses of accommodation bonds and with the prudential requirements for accommodation bonds
• information about the number of accommodation bond balances (if any) that were not refunded in accordance with the timeframes set by the Act. For entry contributions (payable before 1997), information about the number (if any) that were not refunded in accordance with the entry contribution agreement
• a copy of the independent audit opinion on our compliance with the prudential requirements for accommodation bonds
• our most recent statement of audited accounts.

We must also provide:

• if you have already paid an accommodation bond, a copy of your entry in the bond register
• [insert from 1 February 2012] if we invest accommodation bonds in particular kinds of permitted financial products, our investment objectives and the asset classes we may invest in.

Residents, prospective residents or their representatives may request any or all of the available information. We must provide the information within seven days of the request, and the information must be correct at the time of the request.

More details are in section 23.42 and section 23.43 of the User Rights Principles 1997 available from <www.comlaw.gov.au>.

Information is correct as at 1 October 2011

Disclaimer: This document is only a guide to the Australian Government’s law and policies, and cannot take account of individual circumstances. The Department of Health and Ageing recommends that you seek appropriate professional advice relevant to your particular situation.

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