NSW Home Building Compensation Fund (HCBF) - AUDITS
This communication is the second in a series relating to pending HBCF Audits by the State Insurance Regulatory Authority (SIRA).
The State Insurance Regulatory Authority (SIRA) regulates the Home Building Compensation Fund (HCBF) provided under icare. SIRA works with other NSW Government agencies to achieve this, such as NSW Fair Trading and the Office of the NSW Building Commissioner.
Completed Audits
SIRA undertook an initial audit in late September 2023 of building businesses to make sure HBCF insurance has been taken before taking deposits or starting work.
Pending Audits
A further targeted HBCF audit process will commence in late January 2024 which will be focussed on swimming pool builders. Letters will be provided to selected swimming pool builder in advance of the HBCF audit.
Important Notes:
SIRA is using information from the NSW Swimming Pool Register to identify what appear to be recently constructed swimming pools and checking if there is a matching record of insurance for the pool’s construction.
Sampling of swimming pool projects for which there is no matching insurance record will be further investigated.
SIRA will send notices to the business and/or certifier that appear to have been involved in construction or certification of the pool, requiring them to produce information and documents.
These audits are simply to ensure that swimming pool builders are complying with the HBCF requirements. There is no assumption that a business or certifier has done anything wrong as there may be legitimate reasons why no insurance was required or apparent in a particular case.
SIRA appreciates the cooperation of swimming pool builders and certifiers in this process and will be happy to discuss any questions or concerns. Contact details will be included in all notices. SIRA can also be contacted at hbcenforcement@sira.nsw.gov.au about this project.
GENERAL HBCF INFORMATION
What are you required to do?
Under the law, you must buy home building compensation insurance from icare HBCF if:
you are a principal contractor for residential building work (e.g. building, trade or specialist work involved in constructing, altering or renovating dwellings or additions such as swimming pools), and
the price for the work is over $20,000 (inclusive of GST).
You must buy the insurance before requesting or accepting any money (including a deposit) or starting the residential building project. If we audit your business, we will check if you have this insurance.
HBCF – A legal requirement
Buying insurance is a legal requirement under the Home Building Act 1989 of NSW. If you do not buy insurance, you could face a range of consequences, such as:
inability to enforce the contract or recover money from your customer;
penalty notices that will be published on your public licence record;
suspension or cancellation of your licence; or
court action and financial penalties of up to $110,000. If you are convicted a second time, you could be fined a further $55,000 and face jail time.
What happens if I you are audited?
The purpose of the audit is to ensure compliance with relevant laws and regulations. If your business is selected for audit, you may receive a notice from SIRA requiring you to produce information and documents.
It is important to note that if you are selected for an audit, this does not mean your business has done anything wrong.
Further information
How to comply with my insurance obligations
How should I prepare?
SPASA recommends that members review their current building work contracts and speak to their insurance broker to ascertain compliance with HBCF.
For More Information
SIRA: Any questions about SIRA’s audit can be directed to the HBCF Enforcement team at SIRA by phone to 13 10 50 or by email to HBCEnforcement@sira.nsw.gov.au .
SPASA: Spiros Dassakis, Chief Policy Officer: Email: spiros@spasa.com.au
AB PHILLIPS: SPASA's Insurance Partner
Tom Turner
Business Development Manager
03 9520 2936
tomt@abphillips.com.au
Cassie McGregor
Account Manager
03 9520 2930
cassiem@abphillips.com.au