Ontario’s home warranty provider may be attempting to water down or delay changes it has publicly agreed to, say critics and consumer advocates who have seen a draft copy of the provincial agency’s plan for reform.
Tarion Warranty Corp. is meant to serve as a safety net for new home buyers facing financial distress as a result of shoddy construction or irresponsible contractors who don’t honour their home warranties. Critics have complained that it has fought new home buyers to avoid paying claims, was too cozy with the development industry and too lightly scrutinized by government.
A 2017 report by Justice Douglas Cunningham for the former Liberal government recommended dozens of changes, but a report from Auditor-General Bonnie Lysyk in October, 2019, found that Tarion followed almost none of them. After Ms. Lysyk’s report was published, Tarion’s leaders and Ontario’s Progressive Conservative government publicly agreed to implement her 32 proposals for reform.
The Globe and Mail has obtained a copy of Tarion’s transformation plan, dated Jan. 14, which amounts to a road map to addressing the Auditor-General’s concerns. Critics familiar with its contents expressed concern over several instances in which Tarion’s plans appear at odds with the Auditor-General’s recommendations in both process and substance.
The recommendations included fixing a costly and adversarial dispute resolution process, retraining Tarion inspectors, licensing reform for builders, and empowering the internal ombudsperson.
“What they say publicly and what they say privately seem to be two different things,” said Tom Rakocevic, MPP for Humber River-Black Creek and the NDP opposition critic on the Tarion file.
The document lists 74 action items: Ten are marked completed, 16 are marked “in progress,” 18 are marked “TBD” for “to be determined” because they are the domain of the Ministry of Government and Consumer Services (MGCS) or a proposed new home construction regulatory authority. More than half – 30 of 56 – are marked “not started."
“This is what Tarion’s done all the time … the [2017] Cunningham report was swept under the rug,” said Alex Patinios, a homeowner who battled Tarion for years. “‘If we delay, maybe this goes away.’ ... The A-G is harder to sweep under the rug.”
Most of the items with completion dates are scheduled to be done by the end of 2020, but 10 are set for next year, several as late as November, 2021.
The Auditor-General recommended a new pre-delivery home inspection regime including a request for random audits for compliance.
The Tarion plan says work has not yet begun on this issue. It also says: “Our internal recommendation is to use targeted rather than random audits.”
The Auditor-General said Tarion’s board was dominated by builders, and while some have left, a new structure with consumer participation and more independent actors is not scheduled to be in place until 2021. Many of the Auditor’s recommendations involve writing new policies that are more consumer-friendly, but critics fear those policies will not be effective and the current board will approve them.
A review of the corporation’s executive bonus structure (which the Auditor-General criticized for being tied to cutting consumer payouts) is to be completed by March, 2020.
“When it comes to their own salaries and bonuses, they are going to work lightning quick,” Mr. Rakocevic said. “When it comes to getting homeowner warranties guaranteed ... they are dragging their feet.”
Tarion’s chief executive officer, Peter Balasubramanian, (who was appointed on Jan. 1, 2020, to replace long-time leader Howard Bogach) said in an e-mail that the document is a “confidential working draft plan which was inadvertently shared. ... We ask that you respect the confidentiality of the document and to delete and disregard it.”
Tarion declined to comment on specific elements of the plan. “It is our intention to make public our implementation plan to address the recommendations in the Auditor-General’s report once it is finalized,“ said Melanie Kearns, Tarion’s director of strategic communications. MGCS press secretary Nicko Vavassis said the ministry believes the document “should not be viewed as a final plan. Our government is committed to getting this right.”
The long timelines could mean months or years before consumers can expect changes to builder data, the dispute resolution system, training of Tarion inspectors or even enforcement mechanisms to punish bad builders.
“Tarion is resisting change. What the government is proposing is tinkering around the edges," said Mr. Rakocevic, who has proposed closing the agency. "People who need help – people facing mould, structural defects – are not going to be helped.”
Mr. Patinios said Tarion still hasn’t learned to listen to consumers. On 14 items, the plan suggests “targeted” consultations will be required to arrive at the right policy fix: with real estate lawyers, builders, municipalities and other unnamed “stakeholders.” Public consultations are contemplated for only two items (one was optional).
“They consider builders to be a key stakeholder and the consumer is off to the side,” Mr. Patinios said. “I haven’t been invited to any of these consultations.”
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
Shane Dingman