Ministry review

The Government announced this year that it wanted to "achieve better value for money" from its spending on medical alarms. The ministry is consulting on changes and a revamped system is expected to be in place by March 2012.

The government intends to "leverage" its position as the main funder of alarms to negotiate cheaper prices with suppliers. A paper presented to Cabinet estimates up to $9 million in savings a year, although the costs of managing the new system may partially offset these gains.

Under the proposed changes, “approved” suppliers will have to sign an agreement with the ministry setting out their costs and service standards. Individual consumers will still have their own contract with the supplier; and funding (in the form of a disability allowance) will continue to be paid directly to the consumer.

Merv Dacre, Senior Services General Manager at the Ministry of Social Development, said suppliers' contracts would also be assessed as part of the new process. We think that should be a priority.

We'd also like to see suppliers required to have consumer safeguards in their contracts. At the very least, there should be fair cancellation policies – consumers shouldn’t have to sign up for lengthy periods or get stung with cancellation fees. And contracts should contain details of the supplier's performance standards (what it commits to do and when) and its complaints process.

Prompted by impending changes, the industry has recently developed its own code of practice and code of ethics. The codes contain some useful provisions but we think they're unclear about consumer rights – particularly the right to cancel.