Publications
New Arrangements for Aged Care Accommodation Bonds from 1 October 2011
The Government announced on 12 April 2010 that it would strengthen consumer protection for accommodation bonds paid to approved providers. The announcement was made as part of the Health and Hospital Reform agenda.
From 1 October 2011 there will be clearer and stronger arrangements to protect aged care residents’ savings held in accommodation bonds. The Aged Care Amendment Act 2011 and User Rights Amendment Principles 2011 (No.3) detail the new requirements.
The changes to the regulation of accommodation bonds have been the subject of extensive consultation with consumer groups, peak bodies, approved providers and financial service providers.
The new requirements:
- limit the permitted uses for accommodation bonds (such that approved providers may use accommodation bonds for capital works, investment in particular financial products, loans for these purposes and refunding accommodation bonds)
- introduce a two-year transition period for approved providers to adjust and comply with the permitted use requirements
- introduce a new Governance Standard for approved providers holding accommodation bonds
- improve reporting and disclosure for greater transparency and consumer confidence
- introduce new information gathering powers to enable the Secretary of the Department of Health and Ageing (the Department) to better monitor approved providers that may be experiencing financial difficulties or using accommodation bonds for non-permitted uses
- remove restrictions on the use of retention amounts, accommodation charges and income derived from accommodation bonds. This allows approved providers greater flexibility in managing their cash flows and assists to offset the restrictions to the lump sum element of accommodation bonds
- introduce criminal offences where misuse of accommodation bonds has been identified and the approved provider has failed financially, owing accommodation bond refunds.
The Governance Standard takes effect from 1 February 2012. This later commencement date will allow approved providers time to become familiar with the new arrangements and allow sufficient time for approved providers to consider and document their governance systems. For information on the Governance Standard see the attached information sheet Governance Standard—information for approved providers.
From 1 October 2011, amendments to the Disclosure Standard change the way that approved providers disclose information to residents, prospective residents or their representatives. Disclosure to them will be largely on request.
Changes to the Disclosure Standard also include the requirement for additional items to be included in the Annual Prudential Compliance Statement (APCS). This includes an annual cash flow statement reporting on the value of bonds received, permissible deductions and expenditure on permitted uses. For information on the Disclosure Standard see the attached information sheet Disclosure Standard—information for approved providers.
To assist residents, prospective residents and their representatives understand the new arrangements, particularly the information that is available to them on request, Information Sheet 16—Accommodation Bonds for Residential Aged Care has been updated.
In addition to the information sheets, a detailed guide, titled Protecting residents’ savings—a guide to the arrangements for accommodation bonds from 1 October 2011 has been produced. This guide aims to assist approved providers understand and comply with the new arrangements. The information will be incorporated into the Residential Care Manual and an announcement will be made when an updated Residential Care Manual is available.
The three information sheets for approved providers, the guide and the information sheet for residents are all available at the Department’s website.
It would be appreciated if you would make your members and those you represent aware of the changes and the available information relevant to them.
If you require further information, please call 1800 200 422.
Below are the links to the information sheets which were sent out with this mailfax:
