Refunding refundable deposits: January to March 2025

Insights report

Introduction

We do targeted reviews to help providers understand their financial and prudential responsibilities. These reviews help us to identify risks and improve provider compliance.

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

Our aim was to educate and support providers to meet their responsibilities.

We completed another targeted review on refunding refundable deposits in 2024. We sometimes repeat review topics to continue improving sector performance.

Background

From January to March 2025, we reviewed 30 providers across Australia. We checked if they understood and complied with the current prudential responsibilities for refunding refundable deposits.

Until 1 November 2025, providers of residential and flexible aged care that hold a refundable deposit must comply with the prudential responsibilities in the:

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

From 1 November 2025, providers must comply with the prudential responsibilities set out in the Aged Care Act 2024 (new Aged Care Act), the new Financial and Prudential Standards and the Aged Care Rules 2025.

Our findings

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

However, we found some minor errors where providers occasionally didn’t meet their prudential responsibilities. Some providers:

miscalculated, or didn’t pay, the right amount of interest due on the refundable deposit to the older person and their estate
refunded refundable deposits late.

Providers agreed to fix these issues by:

assigning trained staff to do spot checks on processed refunds
making sure processes and procedures for refunding refundable deposits are correct and easy to follow
reviewing refundable deposits information to make sure it is correct
making sure processes and procedures describe which staff roles are responsible for refunding refundable deposits, especially when key staff leave or are away
setting up systems to calculate and confirm:
- the correct amount to refund
- when the correct amount is due
supervising and staying accountable when they use external auditors
regularly reviewing their risk management processes to:
- identify, assess and manage all possible compliance risks
- make sure they can effectively prevent future problems.

We worked with providers to remove the barriers stopping them from meeting their prudential responsibilities. By the end of the review, all providers:

understood their refunding refundable deposit responsibilities
had taken steps to make sure they complied.

Things for providers to consider

Governance

Do you have governance documents that:

show your staff how to refund refundable deposits correctly and on time?
explain the process and impacts of receiving letters of probate?

A letter of probate is provided by the court. It confirms that a will is valid, and that the executor named in the will is legally allowed to manage and distribute the assets and debts outlined in the will. Receiving probate has an impact on your refunding requirements.

Staff

Train your staff and make sure they are up to date on your procedures and prudential responsibilities.
Train your staff when they take on new permanent or short term duties.
Identify key staff who are responsible for refunding refundable deposits.
Make sure you clearly explain staff roles and responsibilities and staff understand them.

Oversight

Assign staff to regularly check communication channels, such as emails, to make sure they process refunds on time.
Do regular internal audits to:
- identify gaps in your current processes
- make sure you meet your prudential responsibilities.
Use external auditors to:
- openly and honestly find areas of non-compliance
- help you meet your prudential responsibilities.
Use software systems and human checks to manage your refunding refundable deposits process.

Older persons

Give older people and their representatives clear information on refunding refundable deposits and how you calculate interest.

Commission actions

We’ll give you more guidance and education on refunding refundable deposits.
We’ll let you know how your refundable deposit responsibilities will change when the new Aged Care Act and new Financial and Prudential Standards are introduced on 1 November 2025.
We might do more targeted reviews on refunding refundable deposits in the future.
We’ll use the information we collect from these reviews to improve our systems that identify risk. This will help us to find and fix possible problems.