Government Publication Has Capacity to Mislead

Victorian retirement village resident raises with Minister for Consumer Affairs Marlene Kairouz the matter of a publication of the department 'Guide to buying and living in a retirement village' that has material which is false, misleading or has the capacity to mislead.


"I wish to raise the issue of statements that have the 'capacity to mislead' consumers made in the booklet downloadable from the Consumer Affairs web site. The booklet being - Guide to choosing and living in a retirement village.


There are three major points of concern all with the capacity to mislead consumers are -


Page 15 - Deferred Management Fee "how not-for-profit villages improve their services or subsidise maintenance charges". There is nothing in the Retirement Villages Act 1986 that requires an operator to do this, in fact they can and do contract away from it by including a statement in the contract of occupation that Deferred Management Fees are 'for their own use absolutely'. The statement in the booklet is simply not true in every case and clearly has the 'capacity to mislead' consumers.


Page 17 - Capital Gains - The statement that 'most contracts share any capital gain between the resident and the village owner' has the 'capacity to mislead' consumers as the use of the word 'most' is simply not true. Industry data has shown that only 41% of Australian village contracts share capital gain. It is difficult to imagine Victoria is completely isolated from this industry ratio.


Page 21 - Auditing of Financial Statements - The statement "the financial statement must be audited. unless residents have agreed by special resolution" - Operators can and have applied for exemption to this mandate under - Section 6 of the Act – (1) Any religious or charitable organization may apply to the Director to have the organization declared an exempt organization for the purposes of all or any of the provisions of this Act. The statement on page 21 of the booklet has the 'capacity to mislead' consumers as the statement is simply not true in every case.


All three issues above relate to material that is false, misleads or has the capacity to mislead retirees when it comes to selecting an individual retirement village or the sector itself.


I was deeply disappointed and saddened by an initial reply on the matter- “The Guide itself contains a clear disclaimer that information which it contains about the law may be expressed in general statements so as to avoid the use of technical legal language.”


I do not seek more 'technical legal language', simply accuracy which would remove the capacity to mislead. Rather than fix the issue the department seems to simply hide behind the disclaimer, to me this is simply not good enough from a government department.


The ACCC is very clear as to corporate responsibility when it comes to misleading statements and I see an even greater responsibility for governments and government departments.


“It is illegal for a business to make statements that are incorrect or likely to create a false impression. It does not matter whether a false or misleading statement was intentional or not”


It is the role of government to enable a commercial environment for the retirement village industry, but it is surely not the role of government to contribute to mis-information which can be at the direct financial benefit of operators whilst at the direct financial and emotional cost of Victorian retirees.


In the interest of Victorian retirees the document should be amended to remove the misleading or capacity to mislead components.

• The statement in the booklet, Page 15 - Deferred Management Fee "how not-for-profit villages improve their services or subsidise maintenance charges" is simply not true in every case. Without the need for any technical legal language the statement should be amended to read for example "how some not-for-profit villages may improve their services or subsidise maintenance charges" .

• Page 17 - Capital Gains - The statement that 'most contracts share any capital gain between the resident and the village owner' is simply not true. Industry data has shown that only 41% of Australian village contracts share capital gain. Without the need for any technical legal language the statement should be amended to read for example ' some contracts may share any capital gain between the resident and the village owner' .

• Page 21 - Auditing of Financial Statements - The statement "the financial statement must be audited. unless residents have agreed by special resolution" is simply not true in every case. - Operators can and have applied for exemption to this mandate under Section 6 of the Act. Without the need for any technical legal language the statement should be amended to read for example "the financial statement must be audited unless residents have agreed by special resolution, some organisations however can be granted an exemption."