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