Monthly Archives: July 2017

“A correct diagnosis is three-fourths of the remedy”. What’s next for the Tarion Review?


We all know someone who’s struggled for years with a medical problem, trying to get a correct diagnosis, with no road map for a cure. As the quotation above puts it (Mahatma Gandhi), there’s no remedy without first a diagnosis.

With this analogy, many similarities come to mind with the recent review of the 40-year old government monopoly, Tarion Warranty Corporation.

For over a decade, consumers, consumer groups, MPPs, journalists, and two former Ombudsmen of Ontario have raised concerns about lack of transparency and accountability at Tarion, it’s loose oversight, monopoly status, and builder-facing culture.

Monopolies don’t like to be critiqued, that’s clear, or lose their market position, that’s clear too. The Tarion monopoly has been left largely un-touched for decades, with ministry officials content to say they’re “working with Tarion“.  Not overseeing, but working with.  Huge difference for consumer protection.

The long-awaited Tarion review, commissioned by the government in Nov. 2015, was finally released in March of 2017. It was conducted by a seasoned judge, Justice Douglas Cunningham, with the assistance of Deloitte Consultants, and held consultations for over a year, costing taxpayers about $750,000.

The judge conducted wide-ranging talks with builders, insurance industry executives, consumers and lawyers. He came to the conclusion the monopoly model should be discontinued in Ontario, and the competitive model used in other provinces should be implemented. This was his recommendation #1, upon which the other 36 were based.

The judge told consumers in mid-2016 that once his review was released, it would be in the hands of the government to do something with it. That’s where we are now.  Premier Wynne’s government has promised new legislation on Tarion this fall, but so far there’s been evasive communication about which of the 37 recommendations will be taken on board. One senses the political spin doctors in the background.

Some of the vague and contradictory information given to consumers so far is:

  • Premier Wynne said in e-mails to consumers that “Ontario …will move forward with the recommendations to further protect owners of newly built homes…” (14/06/17); (All of the 37?)
  • The Ombudsman of Ontario said the Ministry will move forward with “nine” recommendations to fix the dispute resolution process (12/07/17). We only see one in the government’s Terms of Reference for the consultation group it initiated (24/05/17);
  • This consultation group was provided with a list of items “out” of the discussion. The multi-provider model, recommendation #1, is one of them;
  • Some Liberal MPPs told their constituents the government will move forward with “many” of the judge’s recommendations, avoiding saying which ones;
  • Ministry officials told some consumers (28/07/17) that none of the 37 recommendations has been specifically ruled out, to date.

The only recommendation (#5) which seems to have already been taken on board by the government is the separation of the builder regulatory authority from the warranty authority.  Builder lobby groups seem content with this, saying  this would eliminate some conflicts of interest (28/03/17).  Many think this should have been done years ago.

It may serve the government’s interests to be vague about exactly what its plans are for the legislation this fall, keeping as many voters on side as possible during the pre-election period, and trying not to run afoul of top corporate donors.

If past experience with this government is any indication of what they’ll do, they may rule certain recommendations “out of scope” when the new legislation is introduced. They may also give the bill a sales-y title like “Putting Consumers First”, as in the case of Bill 59 earlier this year.

It comes as no surprise that Tarion is reluctant to lose it monopoly status, and is giving push-back to the judge’s review, especially recommendation #1.  Regarding the multi-provider model (recommendation #1), a senior Tarion official put it to me emphatically this way: “the judge was wrong!”

Were the year-long stakeholder consultations, the jurisdictional scans of other warranty programmes, and Deloitte consultants wrong too?

What’s clear to many consumers and journalists is Tarion doesn’t like scrutiny or critique of its policies. The fact that its CEO earns close to $1 million was revealed by an investigative journalist in October, 2016. New home buyers should have a right to see these salaries. They pay a fee to Tarion passed on by builders in the purchase price of the new home. Who benefits from keeping this compensation secret? Oversight by the Auditor-General alone is unlikely to fix the transparency and accountability problems.

To consumers reading the judge’s review, (posted on the ministry’s website), all 37 of the judge’s recommendations make sense, and would help increase protection for new home buyers.

For example, recommendation #22, based on the key recommendation #1, states: “Each warranty provider should be required to have an internal dispute resolution process in place to facilitate the resolution of disputes between new home owners and builders and an internal review process for its decisions.”

If you take a holistic approach in analyzing a complex problem and then prescribe a remedy, you don’t expect someone to implement your plan piecemeal. To do so may distort the overall outcome.

The problems of Tarion are complex and inter-related. To implement only a few of the judge’s recommendations may not fix the serious problems he uncovered in his review. To kick the can further down the road, taking more time and more money for research, will add to the suffering consumers are already experiencing with this out-of-date legislation.

If the serious problems the judge outlined – the conflicts of interest, transparency and accountability gaps, and imbalances in dispute resolution – are not solved by new legislation this fall, the doctor won’t be to blame, nor his diagnosis, nor the prescription not taken.




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