Media release: New fund to protect consumers from dodgy or fly by night builders

Victorians building or extending their homes can do so with greater confidence following the Victorian Government’s announcement of a Building Consumer Protection Fund to protect consumers from dodgy or insolvent builders.

Under the previous ‘home building warranty insurance scheme’ consumers experiencing problems with a builder could only seek financial coverage for an incomplete or dodgy building if their builder was ‘dead, disappeared or insolvent.’ Under the new system consumers will also be able to apply for financial coverage when a builder is deregistered or has their registration suspended, or when a ‘Rectification Order’ issued under the new dispute resolution system is not complied with.

Gerard Brody, CEO of Consumer Action, said building or extending the family home is likely to be one of the biggest financial investments of someone’s life, so measures which protect consumers in the case of unexpected problems are very welcome.

‘Home building warranty insurance has long been referred to as “junk” insurance because it’s so hard to claim. Not only do consumers have to expend thousands of dollars to be successful at VCAT, they then have to take action to wind up a builder before any claim can be made.

‘The new Fund should ensure that consumers have a remedy when there is uncompensated loss as a result of a building dispute’, said Mr Brody.

Consumer Action said the success of the new Fund will be contingent on the effectiveness of the new consumer dispute resolution processes announced last year.

‘Where there is a dispute, independent inspectors from the Victorian Building Authority will be able to make binding Rectification Orders. This should mean that consumers don’t have to go to VCAT, which has been proven to be an expensive and inappropriate forum for many building disputes’, said Mr Brody

Mr Brody said he hoped the Government would consult with consumer advocates as it put together the details of the Building Consumer Protection Fund and the new dispute resolution service. ‘They’ve got the framework right but we know the devil can be in the details, so it’s important there is ongoing consumer input into the further development of the new arrangements.’

‘For example, we want to ensure consumers can use the new Fund to cover other associated costs with building disputes such as alternative accommodation and furniture removal and storage,’ said Mr Brody.

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Media contact: Dan Simpson, 0413 299 567

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