Aged care advice has become a topic of interest as the Senate Community Affairs Legislation Committee’s inquiry into the Aged Care Bill 2024 [Provisions] continues.
In a submission to the Senate earlier this month, 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 at the time.
“The submission calls for stronger regulations to ensure that only licensed professionals provide aged care advice.”
Accounting bodies Chartered Accountants Australia and New Zealand, CPA Australia, and the Institute of Public Accountants also entered a joint submission this month highlighting the need for clearer requirements regarding the role of financial advisers.
“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.”
On the ifa Show, independent financial adviser Nathan Fradley added to this discussion, stating that the nature of aged care advice and the current legislation surrounding it led to very few restrictions regarding who can provide aged care advice, putting clients at risk of potential harm.
“I think what’s interesting here is, financial advisers are licensed to distribute financial product, and a RAD [refundable accommodation deposit] isn’t a financial product and it’s not a credit product, and so it doesn’t really sit in that realm, which means anyone can give this advice,” Fradley said.
“You don’t have to be licensed in anything to do aged care, which is horrifying, but if you look at the relationship a lot of older people have with their accountants, a lot of accountants do manage people’s Centrelink obligations and give advice in this realm.”
Due to the complexities of Australia’s aged care system and the knowledge and skills needed to navigate it, Fradley said, financial advisers are best positioned to assist.
“The complexities that flow into aged care advice aren’t just what the RAD and the DAP [daily accommodation payment] is, they’re not just the Centrelink implications… There is a family law and an estate law aspect to this and having a keen knowledge in those areas and understanding the implications and who the right professionals to bring in when they are is really important outside of just being able to calculate a RAD and DAP.”
“I think this is something that advisers are really uniquely placed to do. We’ve got a code of ethics that means that we have to act in the best interest of that person, not their family, which is really important. That gives the powers of attorney, who we’re working with, backing as well, that they’ve got an independent person helping them make decisions. They can’t be on the hook for something they did wrong, necessarily, if it was done under advice.
“I think with our code, particularly standard six, the broader impacts, the advice we give and what that does, considering the impact on the family, on the people, on the estate, all of these things, I don’t think anyone else has really set up for this. I think as much as we want less regulation, I think protecting people in this space is really important … It’s very difficult to undo aged care things.”
While it is unclear who would be allowed to provide aged care advice under the new legislation, Fradley argued that financial advisers are better equipped to navigate the complexities of this space.
“Whether it’s just financial advisers or financial advisers and accountants or other professionals, and there’s an accreditation that’s universally accepted, I don’t really have a specific opinion on that. Obviously I’d rather it just be financial advisers given broader circumstances. There’s kind of limits that everyone else can’t speak to that we can,” he said.
To hear more from Nathan Fradley, tune in here.
