The Consumer Protection Reform Strategy purported to offer new assurances that consumers would be treated fairly. As its name suggests, however, it was a ‘strategy’ contrived as an imitation of reform and never intended as a new consumer protection reality.
From its inception, the registration regime lacked any integrity. The qualifications for ‘registration’ under the Building Act 1993 were ignored by the governance bodies, with all ‘registered building practitioners’ simply grandfathered over to the new system. In a report released in 2000, the Victorian Auditor-General disclosed the reality: “The 20,600 existing building practitioners, registered under transitional arrangements between July 1994 and June 1997, have not been assessed for suitability in terms of qualifications, skills or experience.”
We now know that of those originally ‘grandfathered,’ 5,694 (or 26 per cent) of them are currently registered as building practitioners, as outlined in the 2015 Victorian Auditor-General’s Report titled Consumer Protection Framework for Building Construction.
If we consider ‘registered builders’, in 2006 as many as 30 per cent had no qualifications, and were awarded ‘registration’ under “flexibility provisions rather than by gaining prescribed qualifications” according to the Building Commission’s RIS: Building Regulations 2006.
Then in 2012, the Ombudsman’s Report revealed how thousands obtained their ‘registration’ as ‘builders’ – without sitting the tests; after failing the tests; after submitting false documents; or with the Registrar knowing applicants but assessing and approving their registration without oversight of the BPB as the accrediting authority. In one example, the Ombudsman found that between January and March 2012, of 18 applicants who failed the written tests, 16 were issued Domestic Builder Unlimited licences.
In relation to builders, the Ombudsman discovered that many applicants used proforma documents to create ‘mock up’ applications. These were fabricated applications, not real in any sense. Astonishingly, the BPB Registrar told the Ombudsman that this occurred in “many thousands of applications, particularly for domestic builders” and “this is the way it has been done for years and is well known to the BPB” according to Ombudsman’s Report 2012.
It was not only common practice to prepare fictitious applications, but it was long-established practice, and authorized by the BPB! The Registrar stated that he regularly met with organizations who coached applicants on “the preparation of applications and development of template type documents.” Even though providing false and misleading is clearly dishonest and an offence under the Building Act, the Ombudsman discovered that the BPB had never rejected an application on this basis. We even have a man who submitted a ‘mock up’ application, had no qualifications and pretended to have built buildings that turned out not to exist. He procured ‘registration’ and went into business charging fees to provide others with mock-up ‘builder’ applications!
The concept of registration as consumer protection was a marketing myth. Now exposed, it appears clear it was never planned to provide any assurance of competence, experience or good character. How could you expect someone presenting false documents to be ‘honest’ and ‘ethical’? It is disturbing to uncover that this appalling registration regime has survived for decades, devoid of any impartiality, lacking in authenticity, and open to abuse and conflict of interest.
Even more perturbing is that three years after the Ombudsman’s findings, nothing has changed. Whether grandfathered over, utilizing ‘flexibility provisions,’ failing the tests, paying for the licence, unable to speaking English or read plans, or the application improperly assessed, no building practitioners were deregistered. This was confirmed by VBA director David Wolf in 2014. As well, the ‘coaching courses’ persist. As corroborated by one RTO, applicants pay money for ‘external assistance’ and they receive a list of questions for the interview and the name of the interviewer!
2. Enforcement of Compliance and Monitoring of Conduct
As is known by all in the industry and obvious from the evidence, enforcing compliance and monitoring building practitioner conduct are manufactured myths. There are no real audits when it comes to building. As the VBA’s Annual Report of 2013-2014 states, there were 99 building permit levy audits of surveyors but no audits of domestic builders, either limited or unlimited. By contrast, although there are 25,688 registered plumbers compared to 25,323 registered building practitioners, there were 16,447 plumbing audits!
Additionally, there are very few inquiries or prosecutions into building practitioners. In fact, under the VBA and BPB in 2013-2014, there were a minute 53 inquiries and 28 prosecutions. Generally it take years for an inquiry to be held, with allegations commonly minimized and ‘penalties’ as minuscule as to be pointless. Consequently, with zero enforcement, a negligible risk of ‘being caught’ and meaningless ‘penalties,’ misconduct has been condoned for building practitioners. In reality, the ‘regulator’ has supported the registered cowboys and afforded no deterrent to aberrant conduct, facilitating increased numbers of recalcitrant and serial offenders. The cowboys are protected and consumers are left helplessly unprotected.
3. Dispute Resolution
The mythical ‘consumer protection’ scheme has avowed that there are few disputes and two forums for dispute resolution, one through Consumer Affairs and the other at VCAT. But both dispute resolution mechanisms are seriously flawed. Just like the registration element of the illusory ‘consumer protection strategy,’ there is a lack of independence, with conflict of interest and integrity major problems in the ‘dispute business.’
The BACV, for which Consumer Affairs is responsible, states that it resolves almost all disputes. Contrariwise, few disputes are conciliated and the real statistics on outcomes are not published. Those employed at BACV know the builders. Stories of BACV officials asking owners to pay money to which the builders are not entitled and visiting owners, builders at their side, and begging owners not to tell their story to the median are abundant. With VCAT, cases are deliberately drawn out for years, those involved as ‘experts’ are often not qualified, many work regularly for the building practitioners and their independence is questionable.
The reality is that building disputes are a natural consequence of having a lawless industry. Also, as governance of the industry has deteriorated over time, the number of disputes has inevitably increased, with the ‘building dispute industry’ growing enormously. Worse, there is a disincentive to reduce ‘disputes’ because the beneficiaries are making lucrative incomes from this substantial sub-industry. As the Auditor-General concluded in his recently released report, neither Consumer Affairs nor VCAT provides any means for consumers to obtain any satisfactory, timely or cost-effective outcomes.
4. Builders Warranty Insurance
The insurance was promoted as ‘Warranty Insurance’ and cleverly marketed to consumers with its spurious nature obscured. Then for the first time in 2010, insurance statistics on this ‘Last Resort’ scheme were released. What had been concealed for years was the very limited triggers to access this so-called ‘insurance’ which allowed less than one per cent of owners to make a claim! It's incredible, but true. Over the intervening years, this consumer con has been in the spotlight; numerous articles have detailed how consumers are compelled to pay for ‘warranty insurance’ that actually provides no ‘warranty’ and no 'insurance’ for the overwhelming majority. Nonetheless, this swindle has been sustained now for 15 years, with Government officials prepared to deceive owners, most owners having no idea of the hoax until they need to claim. It is then that owners learn the reality that they have been deviously duped.