Topic: News


State of play across the Nation on consumer protection

It appears virtually every jurisdiction is struggling with consumer protection in the building industry, and while our trade associations have no desire to change the status quo the current regime is destroying confidence, and the reputation of our industry.

The Northern Territory is in throes of assessing their regime.

Victoria is expecting a new Auditor General Report the near future and are considering change.

New South Wales are about to announce yet another inquiry due to warranty issues in that State.

Tasmania rid itself of the Last Resort regime some 6 years ago. Replaced it with nothing and has never looked back.

Western Australia adopted a new dispute and resolution process, and 80% of their 900 disputes last year were resolved by this process.


Northern Territory up-date on consumer protection reforms

The last Resort Fidelity Fund was introduced in January 2013 amid uproar within the Territory builders.

The Giles Government promised a review within 12 months however it was bought forward and a short review of 3 to 4 weeks was announced on 19th June 2013 by Minister Chandler.

The outcome in December 2013 was totally disappointing as the review failed to meet its terms of reference and was wasted.

We have met with a number of Territory Ministers that share our views and we await the outcomes, and look forward to Chief Minister Giles input to resolve the acute concerns of our industry.


Victorian up-date on building reforms

The Napthine Government announced a complete overhaul of the Consumer protection Framework in May 2013 to be implemented in 2014 and 2015.

Unfortunately the Parliamentary process has not been supported and the reforms have stalled and will not become law in this term of Parliament.

This situation has pleased the trade associations as they wish the status quo to remain and have the insurance facilitated by them, and in particular not see the warranty insurance become part of the One Stop Shop principle under a Statuary Fund that would directly compensate consumers without any third party vested interest.

We are pleased to announce the position of the Napthine Government prior to the election on the 29th November 2014 as provided to the BCA yesterday by email from our Attorney General/Finance Minister Mr Robert Clark.

From: robert.clark@parliament.vic.gov.au
Date: Tuesday, 7 October 2014 3:05 pm
Subject: Domestic building consumer protection reform

“The Napthine Government is committed to implementing the domestic building consumer protection reforms we have previously announced, which will provide better, fairer and simpler regulation and protection for both consumers and builders..

A re-elected Napthine Government will re-introduce legislation to implement the reforms following the resumption of Parliament after the election.”


The removal of the mandatory commercial defects insurance

The removal of the mandatory commercial defects insurance in Victoria took an agonising 8 years to achieve!

This insurance was required to obtain and activate a commercial licence each and every year. It is questionable if there was ever a claim against this insurance.

The Builders Collective persevered with its removal over the years and we would like to acknowledge the assistance of Jeff Norton who undertook a review of it while he was at the Building Commission and that outcome gave Minister Clark the opportunity to act on facts and remove the product altogether.

All commercial builders can now obtain their licence without the impost of an insurance policy that held no value. It was officially removed on the 30 June 2014

The Builders Collective claims full credit for the removal of this insurance.




Industry groups concerned about home builder insurance red tape

  • Nathan Mawby
  • Herald Sun Real Estate
  • April 03, 2014 3:03PM

VICTORIA’S government run domestic building insurance underwriter has come under fire for tying up the states builders with red tape and a lack of transparency.

The state’s peak housing body, the Housing Industry Association of Victoria, has raised concerns over rising levels of red tape being issued by the only provider of insurance for home builders in the state, the Victorian Managed Insurance Authority.

Meanwhile the Builders Collective of Australia noted some builders were being delayed for up to six months as they awaited assessment for insurance eligibility, and raised questions over the transparency of decisions.

HIA Victorian executive director Gil King said the industry group had concerns with rising amounts of insurance red tape being applied to builders.

“It’s another layer of bureaucratic red tape that builders have to wade through,” Mr King said.

“Every year, the administrative burden has another hurdle to jump.”

Phil Dwyer, national president of the Builders Collective of Australia, said he was aware of builders facing lengthy delays for insurance approvals.

“The assessment of builders in some cases seems to be taking a long, long time,” Mr Dwyer said.

Builder Peter Onley, who has built more than 2000 homes in almost 30 years, began applying for Domestic Building Insurance for jobs slated to begin in July last year. He made 11 further applications for insurance, without receiving a yes or no response, up to October when a lack of cashflow, in part caused by a client withholding more than $200,000 in payments, forced him into administration.

Months later the VMIA informed Mr Onley he was a “moral hazard” and was to be refused insurance.

Prior to the rejection Mr Onley paid down debts and restructured his business to make it more viable, but is now concerned he will have to let his five staff go.

“We haven’t been able to start any new business since July 17, 2013,” Mr Onley said.

“All they (VMIA) have issued so far is a proposal to deny.

“I have been red taped out, and I had never had an insurance claim against me previously.”

Mr Onley said he had no intention of leaving clients in the lurch and was requesting a review by VMIA.

Peter Ryan, chief executive of the VMIA, said the underwriter aimed to turn around insurance applications in 25 days.

“The vast majority of insurance applications are processed extremely quickly,” Mr Ryan said.

“For example, the target for new builders seeking insurance with VMIA with turnovers up to $10 million per annum is 25 days. Shorter targets apply for builders with smaller turnover limits.

“Longer time frames can apply where builders provide incomplete or inaccurate information, or the builder’s circumstances require a more detailed financial assessment.”

He said industry bodies had been supportive of the VMIA and its role in providing domestic building insurance.

Mr Dwyer, and Rob Berry a partner at BCR Partners which helps at risk builders make their businesses more viable, are now calling on builders who believe they have been disadvantaged by insurance decisions to alert them to the grievances as they push to have the system reviewed by the state’s Auditor General.

Mr Berry, who acted as the administrator for Mr Onley, said the builder had secured the consent of his creditors to continue trading prior to the VMIA’s rejection.

“We have worked with 18 distressed builders and about 250-odd projects, and in the commercial space they are fine — because there’s no VMIA,” Mr Berry said.

“We approach the creditors and try to get a consensus for the company to trade on, doing a restructure of the business, and then the VMIA say ‘no, we are not comfortable with this’ on the basis of the outcomes offered to the creditors,” Mr Berry said.

Mr Dwyer said in any other industry ASIC would allow a business the chance to continue working with administrators.

“The regulators say he can have another chance by entering into an agreement with his creditors,” Mr Dwyer said.

Mr King indicated he believed delays to building projects caused by the VMIA would be the exception to the rule.

BCR Partners and the Builders Collective of Australia intend to present builders’ concerns to the Auditor General’s office which will make a decision on whether to pursue a proposed investigation into domestic building insurance by June this year.

Netlink: bcrpartners.com.au



Bankrupt builders

It is the brand new neighbourhood fast becoming a ghetto – before most occupants have even moved in. Report by Jackie Quist.