Why Regulators Need to Enforce Consumer Protection Laws

Enforcing Existing Laws Builds Consumer Confidence

Over the past couple of years there has been a lot of publicity about the need to restore consumer confidence in the home building industry. Media stories about builders becoming insolvent, failing to finish homes or carrying out defective work have been common.

It is important to remember that the media will generally look for the stories that attract eyeballs, and stories about bad builders seem to be good at getting attention. When a home building project does go badly wrong the damage both financially and emotionally for consumers will often be horrific. But these projects are a small minority of the tens of thousands of home building projects each year in Victoria alone.

There are already significant home building laws for Victoria. These include:

• Domestic building insurance, which while not perfect does compensate most losses and gets consumers into completed homes eventually
• Strict laws about the contents of home building contracts, including controls over variations and other price changes
• A builder licensing system that requires that homes builders have appropriate skills and experience to manage home building projects for consumers
• The National Construction Code and other building regulations with building surveyors as well as a regulator overseeing compliance with these laws.

There is a powerful case for arguing that while existing laws can be improved, it is also important that these existing laws actually be enforced. An industry that has a weak regulator will usually, fairly quickly become an industry where bad actors gain a competitive advantage over those who comply. 

All too often politicians will decide to avoid responsibility for spending time and resources enforcing existing laws by introducing even more laws. It’s often cheaper and easier to generate paperwork than to get on the ground, see what’s really happening, and then make decisions to enforce.

Ironically, despite strong calls for more reforms based on historic bad behavior, the compliance and enforcement experience for Victorian home builders over the past eighteen months or so has been very different to their experience in previous years. The Victorian Building Authority has become much more active and targeted with their enforcement activity. The number of prosecutions and disciplinary actions has increased dramatically. While it is true that the VBA is also better at publicising its actions, this is also a good thing as it reminds those in the industry that they may get caught.

An active regulator is not something for industry to be afraid of. Yes, they may sometimes misjudge some situations and need their actions reviewed but we currently have a robust legal system that allows for proper scrutiny of a regulator’s activities.

HIA members can contact us on 1300 650 620 for more guidance about these matters.