Tarion sets implementation plan, responding to Auditor General’s scathing report

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Ontario Construction News staff writer

Tarion says it has released an implementation plan to address the recommendations received from Auditor General of Ontario. The new home warranty program also said in a statement last Friday that it is also seeking public input on 10 consumer protection initiatives to improve service delivery and help build a more transparent, fair and accountable new home warranty and protection program.

“We are looking for input from the public and consumers as we modernize our processes, improve our services, and conduct our business in a more responsive and transparent way,” said Peter Balasubramanian, Tarion’s president and CEO. “We are confident the changes we have made, and are currently implementing, will create a stronger new home warranty and protection program for all Ontarians.”

Since the release of a scathing Auditor General’s report last October, Tarion said it has been implementing improvements in a timely manner, and has already:

  • Strengthened corporate governance by protecting the New Home Ombudsperson’s independence, reducing executive compensation, and revising our corporate by-laws;
  • Improved customer service by ensuring service targets are met, developing clear customer standards and enhancing quality assurance measures;
  • Enhanced consumer protection by eliminating the backlog of investigations into illegal building and homeowner complaints, establishing a new process to complete investigations in a timely manner, and increased Ontario Building Code training of staff;
  • Increased homeowner access to timely and cost-effective ways to appeal Tarion decisions including piloting an independent, third-party mediation program;
  • Created greater transparency by publicly reporting on outstanding issues raised by the New Home Ombudsperson, and adding past convictions and information about exceptions to displaying the dollars in claims paid to the Ontario Builder Directory; and ensured
  • Stronger oversight of builders by ensuring past performance is considered, requiring better evidence of financial means to complete projects, and investigating all reasons leading to the cancellation of projects.

Of the 25 recommendations directed to Tarion in the report, the organization says 11 have been completed, with eight more to be completed by the end of this year. Tarion has committed to complete the remaining six items in 2021.

Tarion’s statement follows what the Toronto Star described as a “scathing report” issued Auditor General Bonnie Lysyk, who asserted Tarion had failed tens of thousands of new home buyers by putting the interests of builders ahead of consumer protection,.

Lysyk found Tarion’s processes were confusing and costly to homebuyers, that the corporation failed to flag and sanction bad builders, and she expressed concerns about how the the not-for-profit organization compensated its senior management, by giving bonuses based on the agency’s profits.

Overall, Lysyk included 32 recommendations in her special Tarion audit, including measures to deter the cancellations of pre-construction condos. The auditor said 460 developments have been cancelled in the past decade.

“There’s been a lot of rules and regulations that favour the builder and the lack of government oversight has probably perpetuated those problems,” Lysyk said.

She said Tarion had failed to rigorously ensure homebuilders “operated ethically and with integrity” and it needed a proper Code of Conduct.

“Some builders had their licences renewed even after they demonstrated problematic behaviour and, in some cases, failed to reimburse Tarion for costs incurred to resolve defects,” she said.

In 65 per cent of cases between 2014 and 2018, builders failed to fix problems that should have been covered by the warranty, the audit said.

Tarion provides compensation and then tries to recoup the costs from the builder if there is a defect. The compensation or repair process is supposed to take at most a half-year. Lysyk reported, however, that it frequently took 18 months.

The Star reported that in the last year, Tarion received 70,000 requests for assistance from homeowners. Most were resolved directly with the builder but Tarion intervened in about 1,600 cases and, in the end, paid out $17.4 million in compensation or repairs on about 800 homes.

Tarion’s call centre receives about 90,000 calls a year, handled by nine staff. The audit showed that in about 14 per cent of cases in a sample, 14 per cent of callers received an inaccurate or unhelpful answer.

The audit showed 9,700 consumers were denied Tarion assistance between 2014 and 2018 simply because they failed to submit a form within two 30-day periods allowed by Tarion — the first 30 days and the last 30 days in the year after they took occupancy of their new home. Tarion gives the builder 120 days to fix the problem. If the problem isn’t resolved it’s up to the homeowner to make Tarion aware.

Lysyk said the 30-day windows should be eliminated because they are preventing many people from receiving help.

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