Top not-for-profit consumer advocacy group CHOICE has come out with a scathing rebuke of builders warranty insurance (BWI).

The group states this insurance is the worst insurance product in Australia and it provides little more protection on the purchase of a home than most people would get on the purchase of a blender.

So why would any government retain such a controversial product of virtually no value, and then have the audacity to present it as consumer protection?

Morality, compassion, and integrity are great elements, but they don’t exist when it comes to builders warranty insurance.

Since 2002, there have been dozens of inquiries into BWI and its failure, yet governments provide more spin and retain this shameful product in spite of fierce opposition from all quarters. Opponents now include the insurance industry itself, which said this week the product is fundamentally flawed.

BWI has hurt thousands of consumers and builders alike – many without justification – as the farcical merry-go-round of BWI despair spins in place, leaving a trail of broken homes, financial ruin, depression, and a feeling of hopelessness for those it consumes.

Democracy is a wonderful ideal, but it does not exist within the BWI regime; small business builders suffer under as BWI controls the size of their businesses by capping their annual turnover and what size building project they may undertake.

So where is the upside of BWI that allows governments to retain a product that is now condemned by so many? The very reason this product exists is to deliver the necessary consumer protection under the government’s own Public Policy as well as manage the industry for and on behalf of the registrar of builders in each state.

The Last Resort scheme was intended to manage our industry, ensure the removal of questionable builders and stem the insolvencies, but the reality is this scheme is a dictatorship and there is no evidence it has met its mandate.

BWI has failed on every level over the past 14 years, and now we have reviews in every jurisdiction and every player condemning the product while the various agencies and authorities try and fiddle yet again. This will likely see its ongoing failure yet and prolong its eventual removal.

BWI and/or any of the fancy name changes that have been applied are unsustainable and this BWI product must be removed in its entirety.

So why do they fiddle with such an important issue?

Because the same bureaucrats and trade associations that introduced the BWI in 2002 remain in the same positions today, and the dollars are far too attractive to those who benefit financially from its being.

Further, Joe Hockey changed the Corporations regulation in April 2002, effectively making BWI totally unaccountable and completely secretive. This was the start of the rot setting in, where in Victoria there has been corruption, collusion and maladministration on a grand scale, as exposed by the Ombudsman.

The effect of this approach has taken our once-proud industry on a downhill slide into disrepute and a loss of integrity and honesty, and the legitimate industry have been voiceless and helpless to arrest the slide.

The trade associations have become powerful to this point and they present as our voice to governments, but they are seriously conflicted and hold industry dissent at bay even through the BWI regime that threatens a builders livelihood.

For an industry to be effectively managed and deliver appropriate consumer protection, that management must fully understand the industry it is charged with managing. That’s where the problem exists, as the managers that currently exist do not fully understand the industry, the outdated culture of the past years remains and the complete management regime is devoid of industry participants.

This complete lack of expertise and understanding has cost the wider building industry on a scale that is unimaginable and the cost is unaccountable, as it would run into billions of dollars.

The galling aspect of this scheme’s retention is the cost financially, and emotionally to real people whether they are a consumer or a builder, and this is where governments have failed our wider industry completely.

Enough is enough.