Consumer win: 12 retirement village operators warned about potential Fair Trading Act breaches

The Commerce Commission (the Commission) has written to 12 retirement village operators asking them to ensure they aren’t making misleading claims or including unfair terms in their contracts.

The warning covers over 180 retirement villages across 12 operators and comes after separate complaints by Consumer and the Retirement Villages Residents Association of New Zealand (RVResidents).

Potentially misleading continuum of care claims

We called out the big guns, such as Ryman Healthcare and Arvida, and lodged an official complaint to the Commission for potentially misleading consumers with their continuum of care claims.

The Commission warned six village operators that claims like “Nobody likes having to move” and “Thankfully you can enjoy a continuum of care” are potentially misleading because they contradict the fine print of the contract terms.

Other big facilities we called out and that were warned by the Commission are Heritage Lifecare Villages, Oceania Healthcare, Ultimate Care Group, and smaller player Coastal View.

Villages offering a 'continuum of care’ allow a village resident to transition from independent living through to hospital or palliative care, and any stage in between, should they need it. It’s one of the key reasons people decide to move into a retirement village. 

While advertising on the villages’ websites implied a continuum of care was available, the fine print in the standard terms and conditions limited residents’ rights and access to aged care services. 

A continuum of care is generally only available at the villages’ discretion. It can depend on whether there is space available in the facility, the village agrees to it, and a needs assessment shows an increased level of care is needed.  

It is possible a resident who needs extra health care will have to find somewhere else to live because there isn’t room in their current village. 

In November 2019, we reported on the case of an 86-year-old woman who had to leave her retirement village because no hospital care bed was available at the facility when she needed it. 

Implying a service is a sure-thing, when it’s not is a breach of the Fair Trading Act. 

Potentially unfair contract terms

On the back of the complaint from the RVResidents, the Commission wrote to six retirement village operators which it considered had potentially unfair terms in their standard contracts, also known as “Occupation Rights Agreements”.

We echo the RVResidents’s concerns and have been raising concerns about unfair contract terms at retirement villages for many years.

In total, the Commission found 52 clauses from 6 operators that were potentially unfair.

Clauses of concern included the resident having to pay for some repairs and maintenance of the operator’s chattels despite not owning them or having any ownership rights in the property. Other clauses let the village operator change the charges for village outgoings at any time even though some of these costs are within the control of the operator.

Some villages reserve the right to make changes to the village facilities, without offering a reduction in fees. There were also concerns the ability of some villages to ask for private health information was too broad and there was little opportunity for a resident to object or withdraw their consent.

Five villages – Althorp, Metlifecare, Omokoroa Country Estate, Palm Grove and Tamahere Country Club – also had potentially misleading statements about a variety of issues on their websites.

Metlifecare and Omokoroa Country Estate had potentially misleading statements about residents being able to live in the villages for the rest of their lives. Yet the contracts gave both villages the right to terminate a residents’ right to live there if it’s medically necessary.

What’s next?

While only a court can decide whether contract terms are unfair or the operator has engaged in misleading conduct, the Commission wrote to the villages to assist them in complying with their obligations under the FTA.

It said it has no plans to take further action at this stage, however, it could act in the future.

The Commission asked the operators with potentially unfair terms to respond and justify the terms. However, it’s up to the operators whether they respond or not.

The Commission also recommended the operators seek legal advice about the FTA obligations.

We would hope to see all the operators responding and improving their standard-form contracts and website claims promptly.

The Ministry of Housing and Urban Development (MHUD) is currently reviewing The Retirement Villages Act. The Commission noted that some key financial terms which the RVResidents brought to their attention will be looked at as part of the MHUD review.

Let’s stop unfair retirement village contracts

If you’re battling with your retirement village over an unfair claim, you can complain to the Commerce Commission.

You can also join our campaign to better protect retirement village residents.

We’re calling for a range of changes including:

• Laws that will better protect residents.
• Independent advocacy support for residents.
• Fair contracts that are not heavily weighted in favour of village operators.
• A more effective dispute resolution system.

Stay in the loop by signing up to our campaign.