Call For Quicker Warranty Payouts

Sydney Morning Herald

Saturday December 15, 2007

Sunanda Creagh Urban Affairs Reporter

VICTIMS of shonky builders should not have to wait until their builder dies, disappears or becomes insolvent before they can claim home warranty insurance, a NSW parliamentary inquiry has found.

The report of the inquiry into the operations of the Home Building Service of the Office of Fair Trading, released yesterday, recommended that the Government change the law to allow people to claim their insurance much earlier than is currently possible.

One Greens MP called for the entire home warranty insurance scheme to be abandoned and replaced with a government insurance authority.

At present, a claimant must exhaust all other means of resolving a dispute with a builder - including mediation, protracted hearings in the Consumer, Trader and Tenancy Tribunal or expensive court proceedings - before claiming their insurance.

"We consider it highly desirable that coverage be extended beyond the 'last resort' circumstances of a builder's death, disappearance or insolvency. We are similarly concerned by reports that the current scheme leads to the escalation of disputes rather than their early resolution, and that payouts are sometimes inadequate while the consumer costs associated with exhausting other avenues before claiming on insurance can be exorbitant," the report said.

"The fact that both consumer and industry representatives highlighted these deficits attests to the weight of the problem."

The report, which follows an inquiry that has taken more than a year to complete, also recommended extra resources for the Home Building Service to more closely monitor the licensing of builders, to discipline the bad eggs and to resolve complaints more quickly.

"The Government needs to speed up the process, add more resources and listen to what consumers are saying," the chairwoman of the inquiry, the Liberal Party's Robyn Parker, said.

The report recommended a legal advice service for consumers and "an additional trigger to enable consumers to access insurance without having to pursue a builder's bankruptcy or insolvency". Ms Parker was not able to say what this "additional trigger" could be.

The Greens MP Sylvia Hale, who also sat on the inquiry committee, called on the Government to abandon the privatised home warranty insurance scheme.

"It should be abandoned and a scheme modelled on the first-resort, not-for-profit, publicly administered Queensland scheme adopted," she said.

The Minister for Fair Trading, Linda Burney, dismissed the idea. "It would cost taxpayers in the order of $66 million just to set up, even before a single claim is made," she said. Her office would look at the recommendations made by the committee and respond early next year.

© 2007 Sydney Morning Herald

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