Licence suspensions and cancellations - information for homeowners

Key information

• Building Commission NSW may temporarily suspend or permanently cancel a licence or authority for a range of reasons.
• Tradespeople and contractors are not allowed to perform any building work when their licence is suspended or cancelled, unless a specific arrangement has been put in place.
• If your tradesperson's licence is suspended or cancelled, it does not void the Home Building Compensation Fund (HBCF) policy they took out. However, this does not automatically mean you can make a claim - cover is only available in limited circumstances.
• You may still be liable for payments for completed residential work if it has been performed according to the contract prior to the licence suspension.

Why Building Commission NSW suspends or cancels licences

Licence suspensions and cancellations for tradespeople and contractors can occur for a range of reasons, including when a licence or authority holder:

• becomes the subject of a winding up order under the Corporations Act
• becomes insolvent
• was issued a licence on the basis of a misrepresentation or error
• fails to nominate a nominated supervisor
• engages in misconduct or non-compliance which results in disciplinary action being taken against them
• fails to comply with orders made by the NSW Civil and Administrative Tribunal (NCAT).

Licence suspensions can be temporary (e.g. for a period of up to 60 days) or permanent.

When applying powers to suspend a licence, Building Commission NSW considers the interests of the licence holder, their current customers and the wider NSW community.

Licence suspensions are temporary but licence cancellations are final. If a licence is cancelled, a tradesperson or contractor can later reapply for a licence if they can demonstrate that the reason for the cancelation has been addressed.

What it means if the licence of your tradesperson is suspended or cancelled

Suspended licence holders are not able to perform any building work while a suspension is in place. Cancelled licence holders are not able to perform any building work unless a new licence is issued.

There may be situations where specific arrangements can be put in place in relation to current work being undertaken by a suspended or cancelled licence holder. Such arrangements generally involve the work of the licence holder being supervised by a third party. Any arrangement must be agreed to by the of the Secretary of the NSW Department of Customer Service and the homeowner. Your tradesperson or contractor can provide more information if this is an option available in their case.

You should check the terms of your contract to determine if you have any rights to organise for a replacement contractor to complete the work.     

You may also consider seeking your own legal advice.

What happens when the builder or contractor is issued with a Notice to Show Cause?

Building Commission NSW issues Notices to Show Cause (NTSC) as part of a formal process to determine what, if any, disciplinary action should be taken against a licence holder.

When issued with a NTSC the licence holder has the opportunity to review the asserted grounds for potential disciplinary action. It is their opportunity to make submissions in relation to the findings and whether any form of action should be taken.

Outcomes from a NTSC can include education, fines, licence conditions, suspension or disqualification.

Can a licence suspension or cancellation be appealed?

Details of review options will be provided to the licence holder with the original decision to suspend or cancel. In certain cases, a licence holder may apply for an administrative review of a decision in the NSW Civil and Administrative Tribunal (NCAT).

The Reviewable Decisions Unit (RDU) conducts internal reviews of regulatory decisions made by authorised officers working for Building Commission NSW, Department of Customer Service. These reviews are carried out under the Administrative Decisions Review Act 1997 and other relevant legislation.

In limited circumstances, the decision to cancel a licence can be appealed. When a licence is cancelled, a tradesperson can later apply for a new licence. Any new application will be assessed against the criteria for the issue of a licence, which may include an assessment of the reasons why the former licence was cancelled.

More information for tradespeople about the cancellation and suspension process is available in the licence and credentials section of our website. 

Can customers make a claim on their Home Building Compensation Fund (HBCF) policy?

A licence suspension or cancellation is not an event that automatically triggers the ability to claim on the Home Building Compensation Fund (HBCF) policy.

HBCF policies provide protection for homeowners when a builder or tradesperson:

• becomes insolvent;
• dies;
• disappears; or
• has their licence suspended by Building Commission NSW due to non-compliance with a money order issued by the NCAT or a court, in their favour.

HBCF policies are not considered void if your tradesperson has used invalid qualifications to obtain the licence. Under clause 38 of the Home Building Regulation 2014, the insurer cannot decline a claim because of the failure of the tradesperson to disclose their invalid qualification to the insurer. 

Find more information about making a claim HBCF claim, visit the iCare website.