What do statutory supervisors do?
Statutory supervisors monitor the financial position of the village and the security of residents' interests.
They act as an independent stakeholder for payments by residents to operators, and report annually to the Registrar for Retirement Villages and to residents at an annual general meeting.
Statutory supervisors are licensed by the Financial Markets Authority and are appointed by an operator on registration of a retirement village. The terms of their appointment are recorded under a deed of supervision.
You can find a list of current statutory supervisors licensed to serve the Retirement Village Industry on the FMA site.
What are the duties of a statutory supervisor?
A statutory supervisor has four duties under the Retirement Villages Act 2003 (the Act):
Acting as an independent stakeholder for deposits and progress payments by residents to operators.
Monitoring the financial position of the village.
Reporting annually to the Registrar of Retirement Villages and to residents on the performance of their duties.
Carrying out any other functions specified in the Act or the deed of supervision with the village.
A statutory supervisor must exercise reasonable care and skill to ascertain that the financial position of the village, the security interests of the residents and the management of the village are adequate.
The statutory supervisor has powers under the Act to complement these duties. For example, it can require an operator to provide information relating to the village’s financial position, the security of residents or management of the village within 10 working days.
Who can be a statutory supervisor?
Since 1 October 2011 a person must be licensed by the Financial Markets Authority, under the Financial Markets Supervisors Act 2011, before they can be appointed as statutory supervisor to a village.
How can I find out who is licensed to be a statutory supervisor?
You can find a list of firms who are licensed to provide statutory supervisor services on:
How can I find out who the statutory supervisor is for a particular village?
By asking the operator. Operators must provide residents with details of how to contact the statutory supervisor and other agencies, such as the Retirement Commissioner and Registrar of Retirement Villages.
By checking the disclosure statement for the village. The operator must give an intending resident a copy of the disclosure statement for the unit they intend to purchase.
Anyone can search for a copy of a village’s most recently filed disclosure statement and/or for a copy of the most recently filed deed of supervision, in the village’s file in the register of retirement villages. That register is found under the Companies Office website.
What is a deed of supervision? Where can I see the deed of supervision for a specific village?
A deed of supervision is the contractual document used by an operator to appoint a supervisor to act in respect of a particular village. The deed must record a range of provisions prescribed in the Act and regulations.
The deed of supervision and any subsequent amendments to it must be lodged with the Retirement Villages Register. Anyone can search the retirement villages register and see a copy of any village’s most recent deed of supervision.
Residents and intending residents can also ask their operator to see a copy of the deed.
Does the statutory supervisor’s appointment by the operator mean the supervisor is biased towards the operator?
No. The statutory supervisor holds a licensed, professional position.
The statutory supervisor must meet the requirements of the licence granted by the Financial Markets Authority under the Financial Markets Supervisors Act 2011, and it must perform its duties under the Retirement Villages Act 2003.
The Financial Markets Authority administers a procedure for anyone who wishes to make a complaint about a statutory supervisor.
How do statutory supervisors look after residents’ financial interests?
Most statutory supervisors lodge a land-based security over the village’s certificates of title. The security protects amounts owing to residents under occupation rights agreements at a particular point in time.
This land-based security also gives the statutory supervisor a substantive position to negotiate with any liquidator, receiver or statutory manager if that became necessary. The security is additional to the memorial noted on the titles of all land used for every registered retirement village.
How do statutory supervisors assess the financial position of each individual village?
Statutory supervisors employ accountants or analysts in their businesses to review each village’s audited financial statements. They look for financial trends or results such as: balance sheet insolvency, levels of debt as a percentage of total assets, major variances in year-on-year profit or loss, increases in operating expenses, bank covenants not being met, existing residents not accessing their termination proceeds, maintenance not being carried out, whether occupational rights agreements are difficult to sell and other indicators that may not be in the best interests of residents.
If an issue is found the statutory supervisor seeks advice from the village operator about what action is planned to rectify or mitigate the issue. The statutory supervisor also receives a report from the village’s independent auditor about the audit of the village’s financial statements.
What are the statutory supervisors’ powers if they have any concerns about the operations or finances of the village?
The statutory supervisor has the power to direct the operator to provide specified information to residents or direct the operator to manage the village in a specified manner where the financial position of the village, security of residents or management of the village is inadequate.
The statutory supervisor may also apply to the Court for orders to address any concerns or mitigate further risk to residents.
Does the statutory supervisor act as an advocate for residents?
The deed of supervision requires the operator to accept that the statutory supervisor is a representative of the interests of the residents of the village in any matter relating to the village.
This means the representative role of the statutory supervisor is primarily for the collective interests of residents, distinct from engaging in every individual case where a resident may want advocacy or support.
However a resident is entitled to bring any alleged breach of a right, referred to in the Code of Resident’s Rights, to the attention of the statutory supervisor.
When and how can a resident raise issues with a statutory supervisor?
An operator must have a process for residents to contact the statutory supervisor about an alleged breach of a right or to make a complaint. Residents can ask the operator to see that process at any time.
A resident is entitled to bring any alleged breach of a right, referred to in the Code of Resident’s Rights, to the attention of the statutory supervisor.
At least 10% of a village’s residents may formally request a statutory supervisor to call a meeting so the residents can give their opinions or request the supervisor to exercise its powers. The deed of supervision will contain a provision to this effect.
Residents can also raise issues in general business at an AGM.
What can residents expect from a statutory supervisor at an annual general meeting?
The statutory supervisor’s representative usually chairs the AGM and reviews the minutes. The meeting follows a similar format to company, club or society AGMs where there is an agenda and motions are put, usually to receive a particular report.
The statutory supervisor helps facilitate the meeting and makes sure everyone respects each other’s right to be heard. The supervisor will get a sense of any problems in the village by listening to the questions asked by residents and the operator’s responses
The statutory supervisor will report on the village’s financial statements and on the performance of the supervisor’s own duties under the Act.
What are some examples of how the statutory supervisor has got involved in an issue to assist the interests of residents?
Statutory supervisors become involved in disagreements between residents and operators over contractual issues, fees, and changes to services and facilities. For example, statutory supervisors have assisted residents and managers to reconcile car parking disputes, health and safety concerns or different views concerning the provision of a service.
Statutory supervisors also become involved when a village is sold, its debt is increased or restructured, or it becomes financially distressed.
Statutory supervisors may intervene in disagreements between groups of residents and help by advising resident committees. For example, formally reminding some residents of their obligations to others when their behaviour has upset people.
Sometimes a statutory supervisor becomes involved in an individual resident’s complaint where it is symptomatic of a wider problem in the village. However the statutory supervisor is not an advocate for individual residents.