Major Reforms proposed to HBCF and SOPA

  • The NSW Government (Government) announced late in 2015 that they would be conducting reviews into:
  1. a)Reform of the Home Building Compensation Fund; and
  2. b)Reform of the Security of Payment legislation.
  • Discussion papers have been issued by Fair Trading to canvas several reform options and to seek input from industry participants on any proposed reform. The discussion papers are available to download from the Fair Trading website.

Reform of the Home Building Compensation Fund (HBCF)

  • The HBCF, formally known as Home Warranty Insurance, has been in place in some form since 1972 and has undergone significant changes at various times.
  • The Government is of the opinion that the current system is not financially sustainable as there is a significant loss, hence they are looking for ways of reforming the HBCF in order to cut the cost of the scheme.

 Suggested Broad Reform Models

  • The discussion paper proposes a number of changes. They include:
  1. Model 1: retain the current scheme, reduce administration costs and raise premiums
  2. Model 2: reduce the scheme’s coverage
  3. Model 3: combine/reduce scheme’s coverage and raise premiums
  4. Model 4: move to voluntary insurance scheme
  5. Model 5: combine a voluntary and mandatory scheme
  • Construction_ContractsReforms are proposed in areas such as trade licensing, site supervision requirements, defect inspections, building categories covered and the scheme administration,
  • Participants are provided with the opportunity to make submissions on the discussion paper either online or by written submission by Friday 12 February 2016.

 Security of Payment Legislation

  • Fair Trading has been consulting with industry stakeholders on key issues in relation to security of payment laws and as a result, has produced a discussion paper for public review where participants can also partake in a public online survey on the Fair Trading website or make written submissions on the proposals or ideas outlined in the discussion paper. Submissions are due by 26 February 2016.


Topics Covered in the Discussion Paper Include

  • Progress payments;
  • How payment claims are made;
  • Payment due dates and schedules;
  • Suspension of work when claims are not paid;
  • Retention monies;
  • Adjudication of disputes; and
  • Other issues concerning the Security of Payment laws.


  • Kreisson has been involved in a significant number of security of payment matters over the years and we consider ourselves one of the most experienced teams of lawyers in Australia providing security of payment advice.
  • Kreisson also offers training and seminars on security of payment legislation and more recently have provided training in South East Asia where many countries have or are introducing legislation similar to that in Australia.
  • Kreisson will be making a submission on the Discussion Paper. Parties involved in security of payment claims and adjudication know that at times the whole process can be a stressful and complex. Should you wish to make any suggestions either positive or negative, we encourage you to fill in the online survey or provide a written submission. Alternatively forward your comments to us and we will endeavor to incorporate them into our submission where possible.

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 Kelvin Keane is a Senior Associate in the Kreisson Construction team.

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