New Financial and Prudential Standards

The new Aged Care Act will commence from 1 November 2025. It will replace existing legislation, including the current Aged Care Act 1997 and the Aged Care Quality and Safety Commission Act 2018. 

The existing Standards will remain in effect until then.

As part of this reform new Financial and Prudential Standards will take effect, setting out the minimum requirements for good financial and prudential management of registered providers of government funded aged care. 

The new Standards simplify the current framework by replacing 4 Standards (Liquidity, Governance, Records and Disclosure) with 3 updated, focused Standards: 

• Financial and Prudential Management Standard
• Liquidity Standard
• Investment Standard. 

The new Standards aim to strengthen the financial governance and sustainability of aged care providers, so they can deliver high-quality care and services and maintain continuity of care for older people. 

To support providers, the Commission has developed draft guidance based on the proposed new Standards. The guidance is an example of the type of resource we will provide to help providers understand and apply the final Standards. We encourage providers to review the draft guidance and share feedback to make sure the final resources are clear, practical and useful. 

Public consultation summary report

Thank you to everyone who took part in our recent consultation on the draft Financial and Prudential Standards. The consultation ran from 18 February 2025 to 14 March 2025, and we received more than 160 responses.

Your feedback has been vital in shaping the final Standards.

While there was strong support for the new Standards overall, some submissions raised concerns about the minimum liquidity amount. In response – and following further modelling and analysis – we are making several important changes to the Liquidity Standard.

1. Lowering the required the amount that providers need to hold for refundable liabilities linked to independent living unit and retirement villages from 10% to 2%, recognising their lower financial risk.
2. Including ‘trade receivables’ in the liquidity calculation to better reflect available resources.
3. Allowing providers to submit an evaluated minimum liquidity amount, where they are fall under the default minimum liquidity amount. This gives providers an opportunity to show they manage financial risk effectively in other ways.

These changes will be reflected in the final version of the Liquidity Standard and the supporting guidance. The updated guidance, expected to be made available in August, will help providers understand their options and obligations.

Read more in the Public consultation summary report: The new Financial and Prudential Standards. 

Download presentation slides on the development of the Liquidity Standard.

Financial and Prudential resources 

• Read The new Financial and Prudential Standards guidance for providers
• Read the Financial and Prudential Standards – consultation draft – this is the latest version of the draft legislation which outlines the proposed requirements for providers
• Read frequently asked questions on the proposed new Standards
• Read the fact sheet for older people on the new Financial and Prudential Standards
• View the Understanding the new Financial and Prudential Standards webinar recording and presentation slides
• Read the Compliance Management Insights blog on the proposed new Liquidity Standard and the minimum liquidity amount
• Read the Compliance Management Insights blog on the proposed new Standards
• Download The new Financial and Prudential Standards poster
• Download slides from our presentation to Ageing Australia on the methodology and key considerations in determining the minimum liquidity amount

What’s changing? 

Key changes include: 

Minimum liquidity requirements 

• The Liquidity Standard now includes an enforceable minimum liquidity amount for all residential aged care providers, tailored to their circumstances. 

New obligations for home care services providers

• Home care service providers (in categories 4 and 5) must now comply with the Financial and Prudential Standards, specifically the Financial and Prudential Management Standard. However, they do not need to meet the Liquidity or Investment Standards - these Standards, which only apply to residential aged care providers. 

Liquidity requirements for all residential aged care providers 

• All residential care providers must comply with the new Liquidity Standard requirements, even if they do not hold refundable deposits. 

Enhanced financial reporting and risk management 

• There are extra requirements for financial reporting, investment decisions and managing risk, to improve transparency and governance practices.  

Assess your liquidity level 

The new Liquidity Standard introduces a minimum liquid assets calculation. Providers must calculate and maintain their minimum liquidity amount on a quarterly basis and have a written liquidity management strategy. 

Download our liquidity calculator to enter your data to assess your current liquidity status. 

If you have any questions about the new Standards, or the liquidity calculator you can email us New_FP_Standards@agedcarequality.gov.au