Category Archives: Consumers’ Reform

Conde Nast Collection, Cartoon by Stan Hunt.

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After buying a new home or condo in Ontario, a growing number of consumers say they’ll never to do it again.

Why not?

Many have discovered construction defects in their new homes, and the government-mandated Tarion warranty they bought – in a fee passed on to them by the builder – didn’t compensate them for the defects. The warranty is supposed to “guarantee” new homes against construction defects, and “back-stop” the builder’s obligations to deliver the home “free of defects in workmanship and materials”.  Yet many consumers have found themselves on their own, paying for defects they unfortunately discovered after the Tarion 2-year warranty expired, or which didn’t fit the legal definition of a “major structural defect”.  Further, many who appealed Tarion’s warranty decisions to the “License Appeal Tribunal” (LAT) found themselves up against not one, but two lawyers – Tarion’s and the builder’s – and lost their appeals.

It doesn’t take much to see this is not a level playing field for consumers. It’s not often about who is right, or who is telling the truth: its about legal tactics, with which consumers have no experience. Unrepresented consumers are very vulnerable in the courtroom, and their failure rate is  dismally high, close to 90%. (CPBH analysis of the LAT, 2013)

What continues to frustrate consumers is that their point of view rarely seems to be taken seriously in the policy making process, either at Tarion or the Ministry of Consumer Services. Lip service is given, heads nod, e-mails are filed (or deleted), and little improvement follows. Tarion goes through the motions of Annual Public Meeting question periods, jargon-heavy “consultations” on their website, but little improvement comes out of recommendations made by consumers, consumer advocates and consumer organizations.  MPPs have called out for reform in the Ontario Legislature, underlining that Tarion has not been subject to meaningful reform for its entire existence, 37 years.

The lack of actual consumer participation in policy decisions is not surprising. There are no consumers on Tarion’s board, and no consumer watchdogs are permitted to oversee its activities. An internal committee called the “Consumer Advisory Council”, operates seemingly behind closed doors, and refuses direct contact with consumers. Meanwhile, the affluent and well-staffed building lobbies – BILD and OHBA –  make sure their industry’s interests are well understood and well communicated to boardroom decision-makers. Eight of Tarion’s thirteen board seats are occupied by OHBA builders, and several key building  executives write regular paid columns in many of Ontario’s influential newspapers.

So WHO is representing the consumer point of view at the decision-making table? Builders. Yes, builders, and a handful of lawyers and corporate executives. According to Tarion’s long-time former board Chair, builders are the best ones to represent consumer interests, as he stated for the public record at Tarion’s Public Meeting on April 25, 2013)

Perhaps builders who are supposed to be representing consumer interests will recall a statement made by one of their executive board members of the OHBA, Oct. 20th, 2004 in a “Strategic Review Committee Paper” (pg. 16, para. 5):  “…many members had expressed concerns (…) and that it was important that the bar not be lowered to the point that consumers do not place value on the benefits of warranty coverage.”

Consumer trust and confidence in the new home building industry and the mandatory warranty coverage is key.  Builders, building industry lobbies, Tarion as industry regulator, and the Ministry as “oversight” authority, all have an interest in listening to and  properly understanding the consumer’s interests. They need to take consumer input seriously and involve actual consumers in the policy-making process.

A builder’s version of what consumers think is not the consumer’s point of view.  We’re not all glossy magazine-crazed, “dreamers” obsessed with up-grades, complaining about paint smudges on mirrors.

Consumers deserve to get what they paid for: a new home “free of defects in workmanship and materials”, promised under Ontario law, and the warranty coverage they are obliged to pay for by law. Regulators of the industry shouldn’t end up subsidizing shoddy builders, and making the consumer pay for their wrong-doing. Or making it easier for these builders to escape accountability,  and providing incomplete builder track records to the public. Who would seriously believe that the body charged with regulating the building industry should be dominated by those it is supposed to be regulating? This is a classic case of the butcher inspecting his own meat.

“Listen to the other side”, or “audi alteram partem” is one of the fundamental principles of fairness and justice. If consumers are not properly represented at policy-making tables, the policies made by a builder-dominated board will never protect anyone’s interests but their own, packaged in consumer protection spin.

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Many consumers have voiced dissatisfaction to Tarion about its internal “Office of the Ombudsman”. Many have told  Tarion senior management the term “ombudsman” shouldn’t be used by an employee whose responsibility it is to investigate his own employer.  In order to be credible, this office requires complete independence and impartiality.

Often Tarion’s “ombudsman” has to seek approval from Tarion’s own senior management before investigating matters brought to his office by concerned consumers. By the “ombudsman’s” own admission at the April 30th, 2014 Annual Public Meeting, his office is “dependent” on Tarion’s board, and 8 out of 13 are builders.

What’s going on here?

As Mr. Marin, the Ombudsman of Ontario, stated in a paper to the “Standing Committee on General Government” in 2006: “Under no circumstances should ombudsmen be employees of the organizations they oversee“.  He adds that many organizations use the term ombudsman to “create public relations departments cloaked in the mantle of ombudsmen.”

Why should Tarion be an exception to this rule?

Many consumers have relied on Tarion’s ombudsman as an “independent investigator of complaints” about Tarion, which is the definition of an ombudsman. But they have sadly found he will not investigate, or says the matter is beyond his mandate.

We get it. Then the name of this department should be changed.  The title “ombudsman” gives consumers the reasonable expectation of  independence and impartiality in any investigation. But under its current reporting and pay structure, this office seems unable to provide a credible investigation of its own employer’s business practices.

A Compliance Officer, reporting to the Ministry of Consumer Services, to make sure all rules and procedures are followed at Tarion, and all parties treated fairly under the rules, would seem to make more sense. This suggestion has been brought to Tarion’s senior management in writing several times,  twice by consumers at Tarion’s Annual Public Meetings. But it has been repeatedly ignored or brushed aside in favour of the current in-house “ombudsman’s office”, which seems a fool’s errand.

TARION’s Annual Public Meeting to be held today April 30, 2014 has been overwhelmed with consumer response to attend and ask questions. Tarion will allot only 1 hour for questions/answers. With over 250 consumers attending in person, and over 160+ via Webcast, Tarion finally agreed at the last minute to extend the meeting room to accommodate consumers traveling from all over Ontario.

Here are some of the questions MPP Rosario Marchese (whose Bill 139 calls for greater transparency and oversight of Tarion) Tweeted to his followers today, which he says should be asked of Tarion at its Annual Public Meeting:

–  Why the increase in “illegal building” (new homes built without warranty), if Tarion says its clamping down on it?

–  Why has Tarion not hired inspectors to inspect their registered builders work, while the law (the ONHWPA) requires it?

–  How can Tarion serve the consumers who pay is bills while being controlled by the developers it is supposed to regulate?

– The Province makes consumers pay fees to Tarion, which has a monopoly on home warranties. How do we know they are getting value for money?

– Why has Tarion failed to address transparency problems reveled in this Toronto Star investigation (July 6, 2013)?

–  Average pay at Tarion over 100,000 per year; How much goes to CEO, COO, and 9 Vice-Presidents?  (Tarion is not subject to the Sunshine List, and is not obliged to disclose executive pay.)

– “Is Tarion another ORNGE?” If not, will Tarion open its books and prove it?

These questions deserve answers. Consumers will do their best to get them at the Annual Public Meeting.