From 1 January 2020, NSW retirement village operators have had to comply with a number of new Rules of conduct. The Rules cover standards of conduct, marketing retirement villages, dispute resolution, training and competencies of staff in connection with the management or operation of retirement villages. We have outlined more information about the key changes in this blog.
What has changed?
The Retirement Villages Amendment (Rules of Conduct for Operators) Regulation 2019 (NSW) introduced new Schedule 3A into the Retirement Villages Regulation 2017 (NSW) containing the Rules of Conduct for Operators of Retirement Villages (Rules). Most of the Rules (23 out of 31) commenced on 1 July 2019. The remaining 8 Rules commenced on 1 January 2020 (Rules 11, 14, 15, 22, 27, 29, 30 and 34). Operators of retirement villages need to ensure they comply with all new Rules as a breach may result in a penalty notice against the operator.
Key Rules for operators to know
Strategy for preventing elder abuse (Rule 10)
The Greiner Report broadly advocated for the inclusion of an elder abuse mitigation strategy within the Rules. Elder abuse is now defined by the Rules as ‘a single or repeated act or lack of appropriate action, occurring in a relationship where there is an expectation of trust, which causes harm or distress to an older person.
These concepts within the definition are not any more defined and take their ordinary meaning.
Under Rule 10, operators must: have a strategy for the identification and prevention of any elder abuse in their villages; post a copy of the strategy on the notice board at their villages; and ensure all staff are familiar with the strategy. The strategy must address prescribed content, including examples of elder abuse, information on how to identify and respond to it, roles and responsibilities of the operator’s staff.
Provision of information and assistance to external selling agents (Rule 11)
This Rule applies only when a resident who is a registered interest holder engages an external selling agent. From 1 January 2020, operators must, at the agent’s request, provide information and assistance to the agent within 5 business days of receiving a written request. This includes disclosure and other documents about the village, contracts that may be offered, free access to the residential premises and common areas of the village during business hours.
Representation about ownership of units (Rule 13)
It is a common practice to refer to the leasing or licensing of residential premises at the village as ‘selling’ or a ‘sale’. This is not strictly correct when the underlying village contracts give the right to reside in the premises under a lease or licence.
Operators who operate under a lease or licence should avoid using the expressions ‘sold’ or ‘sale’ and start to use ‘lease’ or ‘licence’ in marketing material where the context is important for a resident to understand what their right to resident actually is.
Under Rule 13, operators must not make any representation to prospective residents that they will ‘acquire ownership’ of a unit in the village, unless the unit is purchased as a strata, community or company title unit at the village.
Marketing of retirement villages and units (Rules 14 and 15) – effective 1 January 2020
Before commencement of these two Rules, there was no prescribed content that had to be included in the operator’s promotional materials. Under Rules 14 and 15, operators now need to ensure that their written promotional materials of at least 200 words (about the village) and at least 100 words (about particular unit) include prescribed statements and that those statements are clearly visible.
Different statements are required depending on whether capital gain is shared between the operator and a resident and whether the operator requires payment of a departure fee and on what basis it is calculated.
Avoiding and disclosing conflicts of interest (Rules 16 – 23)
These Rules address how village operators have to identify and manage conflicts of interest and promote transparency. Under Rule 16, operators must avoid acting if they have a private interest in a function related to the village management (e.g. they are going to receive a financial or other benefit) and that private interest may come into conflict with and affects the operator’s ability to carry out their role impartially and in the interest of residents. The same applies to the operator’s staff.
Operators must promptly disclose conflicts of interest by giving written notice to each resident and take actions to manage them. Operators and their staff must not carry out a function related to the village management if they have a conflict of interest that has not been disclosed to each resident.
Under Rule 22 which came into effect on 1 January 2020, operators must keep records of any conflicts of interest involving the operator or the operator’s staff. These records must be kept for the duration of the employment of the operator or the operator’s staff member concerned and for an additional 5 years after that.
The Rules as drafted are confusing and ambiguous. It appears the intention of the Rules is to highlight and operate where an operator may obtain a financial benefit or gain which the resident was not aware of. The Rules seek to promote transparency of the full extent of the relationship between residents and operators.
Dispute resolution (Rules 24 – 29)
These Rules aim to ensure that there are appropriate, well-formed and transparent processes for residents to pursue complaints and resolve disputes at villages.
Under Rule 27 from 1 January 2020, operators must have in place and maintain for their villages:
- a process for the resolution of complaints made by residents or persons acting on their behalf; and
- a process for the resolution of internal disputes between a resident and the operator or between 2 or more residents.
Both processes must be publicly available on the operator’s website, posted on the notice board at the village and provided to all residents. They must also provide for no longer than 5 business days for the acknowledgment of complaints or disputes and no longer than 60 days for their management.
Under Rule 29 effective from 1 January 2020, operators must keep a record of the details of complaints and disputes raised in the village for at least 5 years.
Training (Rules 30 – 35)
Under Rule 30 effective from 1 January 2020, operators must have in place and implement policies and procedures for the selection, training and supervision of their staff in relation to each role.
In addition, under Rule 34 effective from 1 January 2020, operators must keep records of staff training and professional development for at least 5 years.
Village operators should revisit their internal processes and review their village documentation to ensure compliance with the new Rules.
If you require any assistance in ensuring compliance with any of the new rules of conduct, or wish to discuss any aspect of this article, please contact a member of Thomson
Geer’s Health, Aged Care and Retirement Villages team.
Arthur Koumoukelis | Partner | +61 2 8248 3437 | [email protected]
Lucinda Smith | Partner | +61 2 9020 5748 | [email protected]
Maryna Roganova | Senior Associate | +61 2 8248 5881 | [email protected]
Felicity Thurgate | Summer Clerk