Following complaints by Consumer NZ and the Retirement Village Residents Association of New Zealand (RVResidents), retirement village operators have come under fire from the Commerce Commission for their care claims and contract terms.
“The Commission has put 12 retirement village operators on notice because their conduct risks breaching the Fair Trading Act. In total, these operators run over 180 retirement villages across New Zealand – this is significant and speaks to the fact that our retirement village sector is in urgent need of fixing,” said Jon Duffy, Consumer chief executive.
“Many New Zealanders who should be enjoying their golden years find themselves at the mercy of village operators wielding unfair contract terms and making promises about providing higher levels of care in their advertising, which is at odds with the small print in their terms and conditions.”
Continuum of care claims confuse consumers
Back in 2021, Consumer lodged a complaint with the Commission alleging some villages were misleading people with their continuum of care claims.
Villages offering a continuum of care allow residents to transition from independent living to hospital care, or anything in between. Although many village websites make bold claims about offering a “continuum of care”, many villages’ terms limit a resident’s rights and access to these additional services.
“We are concerned the advertising used to promote many retirement villages has led people to believe they are assured of additional or hospital level care at their facility, when in reality, that care is not guaranteed,” said Duffy.
A continuum of care is generally only available at a village’s discretion – it could depend on availability of facilities at any given time, the village’s agreement, or a needs assessment that says an increased level of care is required.
“We have heard of people having to find somewhere else to live because the care promised in advertising was not available to them when they needed it.”
Consumer’s complaint covered some of the big names in the retirement village industry, including Ryman Healthcare Limited, whose website stated, “Take a weight off your mind knowing that if your needs change we have comprehensive care options that can be dialled up when needed.” These claims were contradicted by the fine print in the contract terms.
“In our view, creating the impression a service is a sure thing, when in fact it’s not, is misleading and is likely to breach the Fair Trading Act.
“Our own research shows that continuum of care really matters when people are weighing up which village is the right one for them.
“Given the significant investment individuals make when entering a retirement village, we think it’s outrageous how widespread the practice of misleading residents has become in the sector, as evidenced by the Commission’s review.”
Unfair contract terms called out
The Retirement Village Residents Association of New Zealand (RVResidents) also complained to the Commission about unfair terms in some villages’ standard contract terms.
The Commission found 52 clauses from 6 operators that were potentially unfair and risked breaching the Fair Trading Act (FTA).
The clauses which caused concern included:
Requiring residents to pay for repairs and maintenance of the operator’s chattels, despite not owning them or having any ownership rights in the property.
Giving a village operator the ability to change the charges for village outgoings at any time.
Giving a village operator the right to change a village’s facilities, without offering a reduction in fees.
“We’re really pleased to see this vindication for our Association and the vulnerable residents who said their contracts contain clauses that are grossly unfair, especially when the village operators lobby group has denied any knowledge of unfair terms,” said Brian Peat, president of RVResidents.
“Now the Commission has clearly stated it believes the terms create a ‘significant imbalance’ in favour of the operator and cause detriment to the residents, we hope to see villages move quickly to fix both existing and new contracts.”
What happens now?
Following the complaints from Consumer and RVResidents, the Commission has written to 12 village operators to highlight their obligations under the FTA and to assist them to comply with those obligations.
Under New Zealand law, only a court can decide whether contract terms are unfair or if an operator has engaged in misleading conduct.
“The Commission’s approach here puts the entire sector on notice and s
