Aveo accused of breaching contract

ABC News reports:-

"Embattled retirement village provider Aveo is fighting another battle over its standard of service and an alleged breach of contract.

Residents at an Aveo retirement village on the Gold Coast are in revolt over the company's decision to stop providing an onsite manager.

The company had come under fire after a joint Four Corners-Fairfax investigation revealed its complicated contracts and exorbitant fees.

Shelagh Williams has been living at Aveo's Southport Gardens facility since 1989.

She said one of the complex's attractions was its provision of an onsite manager to help if there were any accidents, health issues, or maintenance problems.

But in 2014 Aveo called a meeting to discuss permitting the manager to live offsite. Ms Williams' son Greg said residents were outraged.

"It meant first of all that the manager wouldn't be there, secondly if anything happened at the facility there may not be anyone there to assist," he said.

"There's been some incidents down there in the past and more recently in relation to some health issues, and the water was cut off and people didn't know what was going on."

Mr Williams is trained as a barrister and wrote to Aveo stating it had obligations under his mother's contract to provide a resident manager.

He said at that point Aveo stopped the process to remove the onsite manager.

However the issue arose again at the start of 2017 when the manager resigned due to ill health.

Aveo called residents to another meeting.

One attendee told the ABC that Aveo's territorial manager Mark Eagleston told them if they had an offsite manager they could offer a higher salary and therefore attract a higher calibre of applicant.

Mr Williams helped the residents draft another letter of protest, this time to Aveo's chief executive Geoff Grady saying as far as they were concerned the matter of an offsite manager was closed.

The ABC has seen a letter from Aveo to Mr Williams that says there is no reference in Ms Williams' contract "that stipulates and outlines any obligation to have the Resident Manager live on-site at the village".

However, the ABC has seen Mrs Williams' contract and it states: "The Operator shall employ a resident Manager.""

Aveo responds to media coverage from Fairfax and ABC

"Recent Fairfax media articles and ABC 4 Corners have featured accusations regarding Aveo, our staff and the costs associated with living in our retirement communities. Much of that commentary has concentrated on the industry business model and the contractual arrangements within retirement communities and has ignored what Aveo has done to improve its own contracts. The articles also ignore the rapidly growing accommodation and care needs of senior Australians and what Aveo is doing to proactively address them.

Since 2014, Aveo has led the retirement industry through its commitment to our residents, their families and the needs of senior Australians by developing new state of the art retirement communities and housing, and by investing in care businesses and services including aged care, physiotherapy, occupational therapy and podiatry and by improving the delivery of other ‘in demand’ services for our residents including food and telecommunications. Aveo is investing over $700m in retirement products and services to ensure residents are provided with increasingly high service levels and quality at Aveo.

In 2015, in an industry first, Aveo completely restructured its standard purchaser contract that residents sign when moving into an Aveo retirement community. This was done following extensive consumer research to address ways we could better serve our consumers interests. In an industry leading first, the ‘Aveo Way‘ contract developed as a result of that research process now provides customers with clarity on the costs of living in, and subsequently moving out of, an Aveo retirement community.

The main benefits of the Aveo Way – each one an industry leading position:

• A ‘guaranteed buyback’ promise for units that remain unsold for 12 months (and a lesser period of six months in NSW and Tasmania)


• Aveo offers an extended cooling off period of 21 days, and a 120 day settling in assurance for peace of mind


• There is no charge to the resident on exit for reinstatement or refurbishment costs associated with improving their property, and no charge for commissions, or costs of sale or marketing fees


• Aveo supports all residents with a care offering that is tailored specific to their individual care needs


• Aveo offers residents the freedom to transfer within accommodation types in meeting their care needs, within the village, or to any other Aveo community nationally


• No exposure to the real estate market where Aveo controls and facilitates the sale process. As a result, there is no capital loss or gain for the resident taking away uncertainty with fluctuating property prices and providing certainty of the sale price, before the need to sell

Our detailed response to the 29 questions forwarded to us last week can be accessed via the Aveo Statement link below"

Read more at: Aveo Statement

Ken Wyatt promises action on regulating retirement villages

ABC News reports:-

"Federal Aged Care Minister Ken Wyatt has said he was "disappointed" to see the "exploitation" of some residents of retirement villages on last night's Four Corners.

Key points:

• 2007 parliamentary committee recommendations to improve residents' protection never implemented


• Mr Wyatt says no need to wait another 10 years for action, he will revisit report


• Retirement villages "would be more effectively regulated by ASIC", COTA head says

The program highlighted how some retirees have been stung by complicated contracts, oppressive rules and crippling fees.

"I sat there and watched the program and thought: 'How do you justify? How do you justify a $10 fee to provide a key to someone who has locked their key inside?' Because we've all done it," Mr Wyatt said.

"And it irritated me actually, to be quite truthful."

Problems with the retirement village sector were revealed as far back as 2007, when a Federal Parliamentary Committee made several recommendations to improve protection for residents.

Those recommendations were never implemented.

Age Discrimination Commissioner Kay Patterson called on state, territory and federal ministers to work together to implement them now.

"I think there are things that can be done fairly immediately," she said.

"Given that the parliamentary committee was 10 years ago, something needs to be done."

Mr Wyatt said people would not need to wait 10 years for him to take action.

"I now want to revisit that report, look at what the detail was and then look at what options I can take forward, and certainly have discussions with colleagues — because I'm very keen and have always been committed to looking after an ageing population," he said.

The 2007 report recommended:

• Federal, state and territory consumer protection ministers look at whether a statutory supervisor would be appropriate;


• Federal, state and territory attorneys-general look at how they could harmonise legislation; and


• That the ACCC and state and territory fair trading offices form a working party to examine the nature of retirement village contracts, including reviewing all aspects of exit fees and other fees including whether they should be abolished.

However, the Council on the Ageing (COTA) said the 2007 report would not solve the problems, because the sector was changing as a result of federal legislative changes in 2012 and this year."

Govt examines retirement village rules

News.com.au reports:-

 

"The Turnbull government is facing pressure to have two federal watchdogs oversee the retirement village industry.

The ABC's Four Corners program on Monday night exposed what Aged Care Minister Ken Wyatt described as "exploitation" of retirement village residents.

The program and related reports in Fairfax Media detailed overly complex contracts, misleading marketing, lengthy delays in dealing with health and safety issues and massive fees.

"I will take the necessary steps that are appropriate. We certainly have to prevent exploitation of senior Australians," Mr Wyatt said on Tuesday.

One of those steps could be greater harmonisation between states and territories because legislation fell within their jurisdictions.

However, the peak body representing older people, COTA Australia, says national regulation is needed because of gaps in state regulations.

They should be subject to regulation by the Australian Securities and Investment Commission and the Australian Competition and Consumer Commission and not under-resourced and inappropriate State tenancy tribunals, COTA Australia chief executive Ian Yates said.

"When it boils down to it, older Australians deserve the utmost clarity and consumer protection when they are choosing where and how they should live in the latter stages of their life," he said.

While most retirement village residents were happy with their living arrangements, contracts still remained too complex and far too many people became residents without fully understanding the rules.

Age Discrimination Commissioner Kay Patterson, a former federal health minister, says all levels of government need to work together, starting with taking another look at recommendations from a 2007 parliamentary report.

The report recommended governments consider appointing a statutory supervisor, greater harmony of legislation and a joint project between the ACCC and state fair trading offices to examine retirement village contracts and fees."

 

Take this link for full details at news.com.au

Retirement villages that swallow vulnerable people’s money

The Newcastle Herald reports:-

"Despite a groundswell of complaints, problems in retirement villages remain rife – particularly at Aveo, where even the savviest customers can end up defeated. So who’s in charge of the sector and how accountable are they?

The “get poor quick” scheme

Tim Allerton is no pushover. From his office on Kent Street in Sydney’s CBD, the experienced public relations professional is often called in when companies and big names are in crisis, including Seven West Media during its public relations disaster with former staffer Amber Harrison.

But he came up for an unwinnable battle when sorting out the sale of his aunt Joan’s retirement village unit.

He was pitted against retirement village giant Aveo – and in the end, he and his family had to surrender more than $150,000 in exit fees, capital losses and other fees.

Allerton is one of the many Australians who are left to pick up the financial pieces for relatives who have purchased a retirement village unit.

A Fairfax Media-Four Corners investigation has uncovered harrowing stories of financial loss experienced by some of our most vulnerable citizens who have bought into the retirement village sector. And many of these people are residents at villages operated by listed retirement village giant, Aveo.

Allerton’s aunt, Joan Buswell, bought a unit in Aveo’s Lindfield Gardens village in Sydney’s lush upper north shore in 2008 for $250,000. A single woman with a long career as a teacher, she moved into the retirement village after she could no longer look after herself. It was only when she died, at the age of 86, that Allerton learned of the financial mire his aunt had landed herself in.

“The original lease contract was 172 pages, and it contained very dense definitions, charges and so forth, and perhaps at our fault, we didn’t investigate it as heavy as we should have, but we were looking for accommodation for her at the time, and that was our main priority,” he says.

Fairfax Media-Four Corners spoke to numerous current and former residents, their children, lawyers, former Aveo staff and lobby groups, and found some questionable business practices including churning, gouging, safety issues and misleading marketing and advertising. It uncovered a legislative framework that leaves the responsibility for regulating the sector to the overworked, underfunded consumer affairs bodies, NSW Fair Trading and Consumer Affairs Victoria, which don’t appear to have enough powers to help the people it is supposed to represent.

The media investigation found that “churn” is a key part of the business model with Aveo targeting and achieving a “turnover” of as much as 12 per cent per year, or 1200 residents.

That tactic is leading to calls by residents and consumer lobby groups for the competition and consumer watchdog, the ACCC, to intervene."

For full details take this link:- http://www.theherald.com.au/story/4751957/the-retirement-racket-part-2/?cs=4219

Calls for federal inquiry into retirement villages

The Sydney Morning Herald reports:-

Labor, the Greens and former Australian Competition and Consumer Commission chairman Allan Fels have called on the government to urgently review the retirement village sector following allegations elderly Australians are being ripped off.

In a series of stories, Fairfax Media and ABC's Four Corners uncovered questionable practices by one of the biggest listed operators, Aveo, while it was raking in huge profits.

Opposition Leader Bill Shorten blasted the exploitation of vulnerable people in aged care and flagged a willingness for bipartisan reform following the revelations.

Mr Shorten said on Tuesday he was willing to work with Prime Minister Malcolm Turnbull on solving the sector's problems and warned that "large companies who treat vulnerable older Australians in the manner in which we saw last night are not part of the solution".

"A nation that treats its old people in the manner in which we saw on television last night should be ashamed of itself," Mr Shorten said.

Go to the SMH web site for full details.

Retirement village regulation lacking, residents open to exploitation

ABC News reports:-

"Residents in the nation's retirement villages are being left vulnerable to exploitation by a hotchpotch of legislation, regulation and underfunded consumer affairs bodies.

Key points:

• Retirement village residents are not in any federal minister's portfolio


• Several people say they've had trouble selling property


• Concerns raised over dense contracts, high fees and lack of resources to instigate change

A joint investigation by the ABC's Four Corners and Fairfax Media into retirement village company Aveo has found that residents are slipping through the regulatory cracks.

They are not in any federal minister's portfolio and a series of recommendations and reforms that came out of an inquiry into the sector a decade ago were never implemented.

Tim Allerton, a hardnosed crisis management professional and PR expert, believes his aunt was taken for a ride by Aveo after she was forced to move out of a unit in Aveo's Lindfield Gardens village in Sydney after she got sick.

Mr Allerton's aunt Joan Buswell bought the property in 2008 for $250,000.

It was only when she died that Mr Allerton realised the contract she had signed and how difficult it would be to sell the property.

"The original lease contract was 172 pages, and it contained very dense definitions, charges and so forth, and perhaps at our fault, we didn't investigate it as heavily as we should have," Mr Allerton said.

"But we were looking for accommodation for her at the time, and that was our main priority."

The joint ABC investigation spoke to numerous current and former residents, their children, lawyers, former Aveo staff and lobby groups, and found some questionable business practices.

The bodies that are supposed to protect the residents, NSW Fair Trading and Consumer Affairs Victoria, do not have enough powers.

Mr Allerton said he put the unit on the market after his aunt became sick, appointing Aveo as the real estate agent.

Then after his aunt died in early 2013 it became more urgent to sell the unit and wrap up the estate, particularly given the family were being charged monthly maintenance fees.

"The maintenance fees, despite the fact she'd passed away at that time, were around $10,000 to $13,000 for each year, so it was just eating a hole in our pockets," Mr Allerton said.

'They weren't even showing the apartment'

Finally, the family dropped the sale price from $270,000 to $199,000, but still it did not sell.

So the family decided to investigate.

"What we did discover in a range of visits that we undertook was that the agents weren't even showing people the apartment," he said.

"There was dust on the floor and on the fixtures and fittings, as well as a very musty smell in the apartment."

The unit finally sold two-and-a-half years after being put on the market at a 20 per cent discount to the purchase price of $250,000.

After exit fees and other fees, including agency fees, Aveo cut a cheque for $94,000.

Aveo: Exploitation of the elderly rife in retirement villages

ABC News states their 4 Corners program reports:-

"Residents of the multi-billion-dollar retirement village industry have described buying into a retirement village as a "financial sinkhole".

A joint investigation by the ABC's Four Corners and Fairfax Media into retirement village company Aveo has uncovered exorbitant fees and complex contracts.

One former resident describes Aveo's business practices as "totally rapacious, I don't know how they get away with it".

Fairfax Media and Four Corners spoke to current and former residents, their children, lawyers, former Aveo staff and lobby groups and found several alarming business practices at Aveo — including safety issues, misleading marketing and advertising and property sales.

The joint investigation obtained numerous Aveo contracts, which included clauses some lawyers described as complex and draconian.

Chief executive of the Consumer Action Law Centre Gerard Brody described some of Aveo's contracts as among the worst he had seen.

"Not only are they over 120 pages in length, they're dense, they're hard to understand, they're legalistic," Mr. Brody said.

Current and former residents also described the company's model — which takes an exit fee as high as 40 per cent of the original purchase price, leaving outgoing residents often forking out in excess of $100,000 — as "financial abuse of the elderly".

Aveo has 13,000 residents across Australia and is expanding at a rapid rate. It expects to increase its resident numbers to 20,000 in coming years.

Those residents live in just over 11,000 units in 89 villages.

The company is rolling out two new contracts, the Aveo Way — which has exit fees of 35 per cent after three years — and Freedom Aged Care — which charge exit fees of 40 per cent after two years.

An exit fee is unique to the retirement industry. It is calculated as a percentage of the purchase price charged by retirement village operators when a resident sells the property.

Company documents and presentations state a targeted turnover of 10 to 12 per cent of residents each year — or 1,200 units a year.

Other large operators have a lower turnover of residents."

ABC Four Corners Critical of Aveo Group

In an ABC Four Corners program to be aired on Monday June 26 2017 the program lifts the lid on the retirement village industry and the Aveo group with the web site promoting the program stating "Residents of the multi-billion-dollar retirement village industry have described buying into a retirement village as a financial sinkhole."

The Four Corners program is titled Bleeding Them Dry Until They Die.

Take this link for details -  http://www.abc.net.au/news/2017-06-24/elderly-exploited-in-aveo-retirement-villages/8645876

The ABC web site advises "A joint investigation by the ABC's Four Corners and Fairfax Media into retirement village company Aveo has uncovered exorbitant fees and complex contracts."

You can watch 'Bleeding Them Dry Until They Die' on Four Corners at 8:30pm on ABC TV on Monday night June 26 2017.