Prudential targeted review: Refunding refundable deposits

Insights report

Introduction

We do targeted reviews to help raise provider awareness of their financial and prudential responsibilities. The reviews help us to identify risks and improve compliance in the aged care sector.

This targeted review focused on educating and supporting providers to refund refundable deposits correctly and on time.

Background

Providers of residential and flexible aged care that hold a refundable deposit, must comply with the prudential responsibilities in the:

Aged Care Act 1997  
Fees and Payments Principles 2014 (No 2)

This includes providing information to us on how they manage refundable deposits.

Our findings will help you to understand your responsibilities. They will also help us identify risks and create targeted education materials.

We reviewed a sample of providers across Australia. This helped us to assess if providers understood and met their responsibilities for refunding refundable deposits. We did this review over February and March 2024.

Our findings

Overall, provider compliance was good. Most providers had strong governance systems and written procedures on how to refund refundable deposits.

However, we did find providers that didn’t comply with refunding refundable deposits within the timeframe set by law.

Common reasons providers didn’t comply

Some providers didn’t comply because:

they didn’t know what they needed to comply with as they’d lost that knowledge because of staff turnover
there were communication gaps between the head office and services. For example, probate documents were received by the service but not sent to the head office for processing in a timely way.
there were delays in processing refundable deposits, caused by:
not enough supervision of staff administering and processing refundable deposits
sending refundable deposit paperwork to the wrong area
one person’s inbox managing refundable deposit emails instead of a shared team inbox.

During the review, we worked with providers to tackles the issues causing them not to comply. By the end of the review, all providers understood their refunding refundable deposit responsibilities. They had also taken steps to make sure they comply in the future.

Things to consider

Are your processes and procedures helping you manage the transfer of refundable deposit documents?
Do you have plans in place to make sure new and existing staff have regular training?
Do you have checks in place when administering and processing refundable deposit documents?
Is your staff training up to date on refundable deposit responsibilities?
Have you identified key staff who are responsible for refunding refundable deposits? Are their roles and responsibilities clearly explained? Do these key people know and understand their responsibilities?
Do you have a process in place to make sure your residents get regular updates and information on refundable accommodation deposits?

Commission actions

Providing you with more guidance and education on refunding refundable deposits.
We may do more targeted reviews on refunding refundable deposits.
Using the information we collected to improve our systems that identify risk.