Information for financial businesses on handling and resolving complaints about building warranties.
People complain to us about claims they’ve made under building warranties. When we get a complaint we’ll look at both sides of the story to decide what’s fair and reasonable in the circumstances.
Types of complaint we see
When we receive complaints about building warranty, consumers tell us that:
- their builder has failed to complete the build or conversion
- their builder has committed fraud or is insolvent
- there are structural problems with their home
Handling a complaint like this
When you get a complaint about a building warranty, you should reply to your customer within eight weeks.
If you don’t reply in time, or the customer disagrees with your response, they can complain to us. We’ll check if it’s something we can deal with, and if it is, we’ll investigate.
We’d expect you to show us that you’ve investigated the complaint thoroughly and that you have reflected carefully on the circumstances.
What we look at
As with every case, in reaching a decision about what’s fair and reasonable, we consider:
- the relevant law and regulations
- any regulator’s rules and guidance that applied at the time
- what we consider was good industry practice at the time
Under a building warranty, customers might complain:
- before the building is completed
- during years 0 to 2
- during years 3 to 10
Complaints at this stage are rare because issues are usually resolved early on. But we do sometimes see complaints made under this part of building warranties.
Customers are covered if the builder is insolvent or commits fraud and doesn’t complete the build. In cases like this, we’ll check that you’ve acted fairly. Depending on the circumstances, you should either:
- refund the customer’s money
- refund some of the customer’s money if the building is partially complete
- arrange for the building to be finished
We see complaints about you paying less than what consumers expect – this could be because you're only required to complete any remaining works to your own standards, and not the consumer's original specification. And we recognise the consumer is also be required to make any payments that were withheld from the original builder.
We don’t look at all complaints made under this section of the warranty. We can’t look at complaints about your resolution or conciliation service. This includes:
- your decision not to offer a resolution or conciliation service
- what faults you identify
- what repairs are needed
- the repair work completion date
We only look at complaints after the following things have happened:
- you have written a resolution or conciliation report
- the report has told the builder to do something by a deadline
- the builder has failed to complete the works by the deadline or is insolvent or not co-operating
We can’t look at complaints about anything before these things have happened. We’ll look at the time from when the deadline was missed onwards. When we look at a complaint, we’ll take the following things into account:
- when the builder became insolvent or stopped co-operating
- when you should have known the builder was insolvent or not co-operating
- whether the customer told you about the builder’s insolvency or lack of co-operation
You will have needed some time to confirm the builder’s position. We’ll take this into account as well.
It’s not always clear when a builder is not co-operating, so we’ll look at this carefully. Sometimes the builder might be slow at communicating or arranging appointments. This doesn’t necessarily mean they’re not co-operating.
If the warranty says you have to step in when the builder misses a deadline, we might still decide it’s better for the builder to do the work. This is because sometimes, the builder might be co-operating but has experienced delays – for example, with deliveries. In cases like this, asking you to take over might cause a longer delay than waiting for the builder.
If we’re satisfied the builder is insolvent or won’t co-operate, we’ll probably ask you to take over. If you’ve delayed taking over, we might ask you to pay compensation for the delay.
We sometimes see cases where there’s more than one resolution or conciliation report. This can make it difficult to work out whether the deadline has expired or not. We’ll look at both reports closely to decide what’s fair.
Most of the complaints we see fall into this section of the warranty. Customers are covered for structural problems where the builder hasn’t complied with your technical requirements. We’ll look at the technical requirements that were in place when the property was built or converted.
Normally, for the customer’s claim to be valid, all of the following must be true:
- their home has a defect
- the builder has breached technical requirements
- the defect has caused damage
If applicable, we’ll also check that the value of the claim is more than the policy’s minimum claim value.
We’ll carefully look at the circumstances of the case and the dispute you have with your customer. For example, you might agree there’s a defect but disagree that there’s any damage. We’ll look at whether the evidence shows the defect caused any damage. We’ll look at Building Regulations alongside your technical requirements.
A customer might complain that they don’t think you’ve assessed the cost of the repair fairly. We’ll ask you for a breakdown of how you calculated the cost. If you disagree with the customer about the cost, we’ll look at the difference in costs to decide what’s fair.
How we look at defects
A ‘defect’ is usually a breach of technical requirements. We’ll need to look at whether a technical requirement exists for your claim. If it does, we’ll then work out whether the requirement has been breached. If we decide there’s been no breach, the claim is not valid.
How we look at damage
Your customer might complain that there’s damage to their property but you might say it’s not covered. The warranty might say the damage has to be ‘major’ or ‘physical’. Most policies define what this means. If the policy doesn’t define ‘major damage’ or ‘physical damage’ we’ll look at whether it’s major or physical in the context of a new home.
Major damage often means the property needs extensive repair works, including complete or partial rebuilding. When we look at a complaint, we’ll consider expert evidence to decide whether the damage is major.
When we look at a complaint, we’ll also check that the damage was caused by a defect. For example, the render on one side of the customer’s house might be damaged, but the same defective render could be on all four sides. The undamaged sides of the house would not be covered. So we might say it’s fair for you to just repair the damaged side.
Policies with this extra cover will normally cover immediate danger to the customer’s physical health or safety. With a complaint about this type of cover, we’ll look at the building regulations and the immediate danger to the consumer’s health or safety.
Putting things right
If we decide you’ve treated the customer unfairly, or have made a mistake, we’ll ask you to put things right. Our general approach is that the customer should be put back in the position they would have been in if the problem hadn’t happened. We may also ask you to compensate them for any distress or inconvenience they’ve experienced as a result of the problem.
The exact details of how we’ll ask you to put things right will depend on the nature of the complaint, and how the customer lost out.
Read more about this in our guide to understand compensation.
We might ask you to:
- deal with a claim you’ve rejected
- take over from the builder if the builder is insolvent
- take over from the builder if the builder is not co-operating
- add interest to any claim you should have paid
- pay for more work to be done if the customer has complained about repairs
- pay compensation for any loss or inconvenience
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Business Support Hub
If you want to talk informally about a complaint you’ve received, you can speak to our Business Support Hub. They can give general information on how the Financial Ombudsman might look at a particular complaint. We also offer guidance on our rules and how we work.
Find out how to contact the Business Support Hub.