Shares in retirement village giant Aveo slumped on Monday following news Australia's consumer watchdog will launch an investigation into the company.
Australian Competition & Consumer Commission (ACCC) chairman Rod Sims has said the agency will investigate some of the "more serious matters being raised" in relation to Aveo and that ASIC and state regulators would also need to get involved.
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'Look very carefully at the contracts'
Tim Allerton helped his aunt try to sell her Aveo retirement village unit, and despite his best efforts, his family had to surrender $150,000 in various fees on the way out.
The share price fell 5.4 per cent on Monday, closing at $2.64.
A joint Fairfax Media-Four Corners investigation uncovered questionable business practices at Aveo, including churning of residents, fee gouging, and safety issues.
News of the ACCC's investigation was welcomed by seniors advocacy group National Seniors Australia, which has repeatedly called for uniform legislation governing retirement villages.
Its chief advocate Ian Henschke said the ACCC investigation was a "sensible step".
He said the sector was in dire need of a makeover to overcome piecemeal state laws that left older people locked into increasing fees and charges, including exit fees.
Mr Henschke said a simple, standard, fair and universal contract and a commissioner to oversee any complaints was needed.
"Many people buy into retirement villages expecting to have autonomy and security in their later years," Mr Henschke said.
"Instead, more people are being faced with unaffordable increases to ongoing fees and charges and reduced service standards, causing them a great deal of worry and, at times, fear and a sense of persecution."
Geoff Grady, chief executive of Aveo Group said: "We're proud of the innovative and industry leading work we do in the retirement sector and look forward to participating in and contributing to any review of it.
"Aveo undertakes extensive consultation in relation to any village redevelopment proposals it undertakes.
"Usually we need all residents in impacted areas to agree. We do not expect that we will achieve full agreement from all village residents but we are seeking to fairly balance the needs of existing residents with the growing demands of future residents for improved retirement product on metropolitan middle ring suburban sites with access to good facilities."
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