Protection measures now in force

MBIE’s new consumer protection guidance for builders details new regulations

New consumer protection measures, included in the Building Amendment Act 2013, came into force on 1 January 2015.

According to MBIE, the new measures have been adopted in response to consumers having little ability to distinguish between practitioners who have a good business history and repeatedly turn out quality building
work, and those who use low-skilled labour, take shortcuts and do not stand behind their work. This type of behaviour creates an imbalance in the sector, as poorly performing practitioners often experience competitive advantage over their better-performing counterparts.

MBIE suggests that this is largely due to consumers often selecting building contractors on the basis of price alone, with little value placed on a practitioner’s overall credentials and in-service track record. The Government seeks to rebalance this lack of transparency through the implementation of the new consumer protection measures.

“It’s a good idea to make a master copy of your disclosure statement and then amend it for each individual job – this can save you time and money

To outline the new measures and reiterate other changes that have occurred over the past two years, guidance has been released. It is divided into four parts:

• New consumer protection measures
• Before building work starts
• Once building work finishes
• What if things go wrong?

Under Construction will feature this content over the next few editions, as well as the ‘Guide to Tolerances’ when it is released later in the year.

Disclosure Statements

By law, if you are going to contract directly with the homeowner you must give them a disclosure statement that includes:

• Your full legal name; whether you are trading as an individual, partnership or limited liability company; the address of your business and when it was formed; and contact information, including phone numbers and email address.
• Information about the key contact person (eg the project manager or site foreman) who will be involved in carrying out or supervising the building work, including: their relevant qualifications, skills and experience; their LBP number (if applicable); and their contact phone numbers.
• Information about insurance policies you have, or intend to have, for the building work. This must specify the amount of the cover and any relevant exclusions on policy coverage.
• Information about any guarantees or warranties you offer in relation to the building work. This must include the period of time the guarantee or warranty is offered for and any limits or exclusions. If it is a product warranty, you must specify what products are covered. NOTE: If you have been hired by the main contractor, you do not need to provide this information.

Keep in mind!

Anyone who knowingly provides false or misleading information, or who knowingly leaves out information they are required to provide in the disclosure statement, is liable on conviction to a fine of up to $20,000.

Further details

It’s a good idea to make a master copy of your disclosure statement and then amend it for each individual job – this can save you time and money.

• You can find a disclosure statement template online at www.doyourhomework.co.nz. You can use this to produce your own disclosure statement covering the requirements. Make sure you give a copy to every new client before the contract is signed if the building work will cost $30,000 or more, or if the client requests it.
• If your business is not an individual, partnership or limited liability company, you will need to write ‘none of these’ against the relevant question and provide a description of your entity (eg a trust).
• You can’t include other information in the disclosure statement, but you can provide additional information to your client about your business by attaching other documents.
• Make sure you haven’t left anything out as this could cause a problem later on. If you provide false or misleading information, or knowingly leaving out information, you could
  be liable for a fine of up to $20,000.
• Contact your insurance company for a copy of your insurance certificate, and then use this information to help complete your disclosure statement.
• If you’re a bigger company and you don’t know who the key contact person will be at the quoting stage, provide this information to the best of your knowledge. Make sure you give your client an updated disclosure statement when you sign the contract, if the information has been updated or changed.
• You can be fined $500 for not providing the disclosure statement, so make sure you get on to it for each and every client.
• For additional help, check out our guidance at www.doyourhomework.co.nz.