FAAA calls for stronger controls on unregulated aged care advice

In its submission to the Senate community affairs legislation committee inquiry into the Aged Care Bill 2024 [Provisions], the Financial Advice Association Australia (FAAA) backed Aged Care Steps’ argument for stricter controls around aged care advice.

“Aged care advice is complex and when it is provided by someone who is unqualified and unlicensed, can lead to significant financial harm for older Australians,” the FAAA said.

“The submission calls for stronger regulations to ensure that only licensed professionals provide aged care advice.”

The association added that there is a “pressing need” for older Australians to receive “high-quality aged care advice from a fully qualified financial adviser”, given the way it interacts with taxation, social security and estate planning.

“Financial advisers consider the funding of aged care services in helping clients plan for their future and address a broad range of inter-related implications,” the submission said.

“Enhancing public awareness and education about the importance of seeking financial advice on aged care will benefit those who are forced to access aged care. More can be done to encourage those entering this important area of specialisation.”

There also needs to be clearer requirements around the role of financial advisers, the FAAA added, echoing the sentiments of a number of accounting bodies.

Namely, in a joint submission to the Senate inquiry, Chartered Accountants Australia and New Zealand, CPA Australia, and the Institute of Public Accountants noted that financial advisers are required by the legislated Code of Ethics to consider the potential future aged care needs of clients.

“This may include acting as the client’s representative in relation to aged care matters and interactions with aged care providers. However, it is unclear how the function of financial advisers, defined under the Corporations Act as ‘relevant providers’, fits into the role of ‘advocate’, ‘representative’ or ‘supporter’ as described in the bill,” the submission said.

“The law must clarify how these definitions interact [and the intended role of a person acting under these definitions] and apply to the assistance financial advisers and others provide clients in relation to their aged care needs.”

Considering the FAAA was part of the accounting bodies’ joint submission to the government’s initial consultation on the bill’s exposure draft in March, it is unsurprising the association has backed their current stance as well.

“Given the provision of financial advice is heavily regulated under the Corporations Act and the Code, with oversight by ASIC, we recommend it be made clear that ‘relevant providers’ operating under the Corporations Act are not intended to be captured under the definitions or provisions in the New Aged Care Act,” the FAAA said.

“This clarification could be included in the explanatory memorandum to the final bill.”