Village operators on notice over misleading care claims

A Commerce Commission warning to retirement village operators could open the door for residents to claim back some money they have had to unfairly pay, a financial commentator says.

Twelve retirement village operators have been put on notice by the commission for misleading care claims, and for some of their contract terms.

The commission investigated the operators – who run over 180 villages, and include Ryman, Arvida, Metlifecare and Oceania – after complaints from Consumer NZ and the Retirement Villages Residents Association.

In 2021, Consumer NZ complained that some villages were misleading people with their continuum of care claims, while the residents’ association complained about unfair terms in some villages’ standard contract terms.

Letters released under the Official Information Act yesterday reveal that the commission told the operators that their conduct risked breaching the Fair Trade Act.

Six were warned that claims like “Nobody likes having to move” and “Thankfully, you can enjoy a continuum of care” were potentially misleading because they contradicted the fine print of the contract terms.

The commission also found that 52 contract clauses from another of the six operators were potentially unfair. That issue was discussed in the letters.

Clauses of concern included residents having to pay for some repairs and maintenance of the operator’s chattels despite not owning them, and operators being able to change the charges for outgoings at any time even though some costs were in their control.

But the letters did not represent a formal finding that the operators had contravened the law, it said. “Only the courts can decide if a breach of the law has occurred.”

Financial commentator Janine Starks said that while the commission had only given operators a slap on the wrist, the correspondence was a victory for residents, and could open a path for compensation claims.

One of the big things to come out of it were comments around the repair and maintenance of chattels, where the commission made it clear there was a significant power imbalance between operators and residents, she said.

“Even where changes had been made, the commission indicated it was not good enough, because there are a whole lot of older people who have been paying for these things for years because they had no choice.

“I can’t see why residents would be happy with that. It would be good if they were able to take a claim about this to the Disputes Tribunal.”

But currently only the Commerce Commission was able to do that, and it did not seem to do it, she said.

“So it is an aspect of the law that needs to be changed to allow residents to take this route.”

It would mean residents could make a claim for just a small cost, and that would help address the “blatant unfairness” of the situation, she said.

Retirement Village Residents Association president Brian Peat said the letters were vindication for the association and for vulnerable residents who had said their contracts contained clauses that were grossly unfair.

Retirement villages offered residents a high standard of life and independence, but there were many fishhooks in contracts, he said. “When misleading claims are also made by operators, that can not only sour the experience but have significant financial consequences for residents and their families.”