Australia’s aged care regulator is investigating allegations that some residential care providers have been charging vulnerable elderly residents for services they were unable to use, did not understand, or were never legally required to pay for, raising fresh concerns about transparency across the sector.

The investigation follows a growing number of complaints from residents and their families, with several providers already reviewing their charging practices and issuing refunds after concerns were raised. The issue has also prompted a major class action against one of Australia’s largest aged care operators, while regulators warn they are prepared to take enforcement action where providers have breached the law.

Among the most striking cases is that of Sydney man Jeff Gilling, whose mother Dorothy entered residential aged care while living with advanced dementia.

When reviewing the admission paperwork, Gilling discovered his mother’s contract included an additional daily charge of $52 covering services such as Foxtel television, newspapers, organised outings and a selection of wines.

He said his mother was in no condition to benefit from those extras.

“She was in advanced stages of dementia,” he explained, noting she could neither operate a television nor make meaningful choices about the services listed in the package.

Despite questioning the charge, he was informed that the additional service fee was not optional if his mother wished to enter the facility.

Faced with the urgent need to move her from hospital into residential care, Gilling reluctantly signed the agreement.

Only later, after researching Australia’s aged care legislation, did he discover that providers can generally only charge additional service fees where residents agree to receive the services and are capable of accessing and benefiting from them.

Armed with that information, he challenged the provider’s decision.

After internal reviews, the facility refunded more than $26,700 covering hundreds of days during which Dorothy lived in a dementia support unit. A later review resulted in an additional refund of just over $10,000, bringing the total repayment to almost $37,000.

Gilling believes many other families may never realise similar charges can be challenged.

He said relatives often find themselves under enormous emotional pressure when trying to secure residential care for an ageing parent, leaving little opportunity to carefully scrutinise lengthy financial agreements.

“You’re really the David to their Goliath,” he said, describing the lengthy effort required to pursue a refund.

The case is far from isolated.

The Aged Care Quality and Safety Commission says it received 199 complaints relating to residential aged care fees, funding arrangements and service charges during the first half of 2026.

Most complaints involved privately operated facilities, although complaints were also received concerning not-for-profit and government-operated providers.

Commissioner Liz Hefren-Webb has confirmed the regulator is investigating several providers amid concerns some may have misused additional service charges or the newer Higher Everyday Living Fee (HELF) arrangements.

While declining to identify individual providers because investigations remain ongoing, she said some organisations had already voluntarily changed their practices after concerns were raised.

The regulator has also publicly outlined examples of practices that may breach the law.

These include attempting to charge residents for services that should already be included in standard residential care, presenting optional services as compulsory, removing basic amenities only to charge residents to restore them, and proposing fees for entertainment provided free by volunteers.

Running alongside the regulator’s investigation is a significant Federal Court class action against for-profit provider Arcare.

The lawsuit alleges residents across more than 50 facilities were unlawfully charged mandatory “signature package” fees covering services including high teas, Foxtel, bus outings, exercise classes and premium dining experiences.

According to the claim, many residents were physically incapable of participating because of advanced illness, restricted diets or cognitive impairment, while others were allegedly charged for services providers were already legally obliged to deliver as part of standard aged care.

Lawyers acting for residents allege thousands of people may have been affected between 2020 and 2026.

Arcare has declined to comment on the allegations because the matter remains before the court.

The legal dispute highlights broader questions about how Australia’s aged care funding system has evolved following reforms introduced after the Royal Commission into Aged Care Quality and Safety.

Since November 2025, providers have been permitted to offer residents optional Higher Everyday Living Fee agreements for premium lifestyle services beyond the mandatory standard of care.

Examples may include upgraded dining experiences, premium entertainment options or enhanced recreational activities.

However, government rules make clear these arrangements must remain voluntary.

Residents cannot be required to sign an agreement before entering care, providers cannot make premium fees a condition of admission, and people should not pay for services they cannot or will not use.

Residents are also entitled to review or cancel those arrangements under prescribed conditions.

Regulators are increasingly concerned some providers may be stretching those rules.

Commissioner Hefren-Webb has warned that providers cannot reduce the quality of ordinary meals or everyday services simply to encourage residents to purchase premium packages.

She stressed every resident remains entitled to nutritious, appealing meals and quality care regardless of whether they pay additional fees.

The Commission says it will use its regulatory powers where investigations uncover unreasonable or unlawful conduct and expects refunds where residents have been incorrectly charged.

Consumer advocates argue the issue extends beyond individual cases.

Dr Sarah Russell, director of advocacy organisation Aged Care Matters, has warned the newer funding arrangements risk creating a two-tier aged care system where wealthier residents gain access to additional lifestyle services while others miss out.

She has also questioned whether some providers are charging residents for services that add little genuine value or rely on volunteer support rather than provider-funded programs.

The debate comes at a time when Australia’s aged care sector is undergoing one of its biggest regulatory overhauls in decades.

Providers continue to face increasing workforce costs, stricter staffing requirements and stronger quality standards introduced following years of public concern over neglect, inadequate care and financial transparency.

At the same time, government policy seeks to give providers greater flexibility to offer optional premium services while protecting residents from inappropriate charging practices.

The challenge for regulators is ensuring providers recover legitimate costs without exploiting elderly residents, particularly those living with dementia or other conditions that limit their ability to understand complex financial agreements.

For families, the latest investigation serves as a reminder that additional service charges should not automatically be accepted simply because they appear in admission paperwork.

Under Australia’s aged care framework, optional services must genuinely remain optional, residents must be capable of benefiting from what they are paying for, and providers remain responsible for delivering a high standard of everyday care regardless of whether premium packages are purchased.

As investigations continue and the Arcare class action progresses through the courts, further scrutiny of fee structures across Australia’s aged care industry appears increasingly likely.