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Financial and Prudential Regulatory Insights – March 2023

Peter Edwards, Executive Director, Financial and Prudential Regulation

In last month’s post, I reflected on some of the things the Royal Commission into Aged Care Quality and Safety said about financial and prudential oversight of the aged care sector. I noted the distinct, but complementary, roles the Commission and the Department of Health and Aged Care (the Department) have in supporting the transformation of the sector.

One aspect of the Commission’s and the Department’s distinct roles that can cause confusion is the difference between the Commission’s financial and prudential regulatory role and the Department’s program assurance responsibilities. Both of these see the Commission and the Department taking an interest in a provider’s financial operations. However, the purpose of the scrutiny exercised by the two agencies is quite different.

The Commission’s focus whenever it engages with a provider in relation to their financial operations is on identifying financial and prudential risks that have the potential to harm consumers’ interests. That harm could take the form of a provider making poor financial decisions that impact quality of care or safety, or that place consumer financial contributions at risk. The Commission’s interest is not confined to consumers in residential aged care, as we are also taking an increasing interest in home care providers’ financial operations; particularly around charging practices or expenditure choices that could unnecessarily limit a consumer’s access to the services they need.

In contrast, the Department has overarching responsibility for ensuring that public money that has been allocated by Government to provide aged care services is delivering desired program outcomes and is not subject to fraudulent misuse. This includes having in place necessary processes that monitor program effectiveness and efficiency. Through this, the Department plays an important role in identifying program gaps and weaknesses, thereby ensuring that the volume and quality of services that different programs can deliver is maximised.

In my next post, I will ask what does excellence in financial governance look like? In exploring that question, I am keen to draw on the expertise of aged care providers across the sector to start building a picture of what best practice looks like and how it helps to support the delivery of safe high-quality care. 


Peter Edwards

Executive Director, Financial and Prudential Regulation

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