What happens when a complaint is made against you in NSW

A complaint about a builder rarely arrives as a single, tidy issue. A homeowner who is unhappy about a bathroom waterproofing failure may also allege that you did not hold the right insurance, that you took a deposit before the contract was signed, or that you refused to hand over documents you were required to provide. The first of those is about the work. The rest are about you as a licence holder.

That distinction matters more than most builders realise, because the two kinds of complaint are handled through different mechanisms with different consequences. A rectification order tells you to go back and fix something. A disciplinary process asks whether you should continue to hold a licence at all. They can be triggered by the same phone call to the same regulator, and they can run at the same time.

This article is about the second track: what happens when a complaint becomes a licensing and disciplinary matter, how it differs from a defect order or a payment dispute, and what you should have on file before it does.

Two tracks, one complaint

When a homeowner contacts the NSW Government about a building dispute, the matter is assessed and sorted. Some issues are about the condition of the work and the contractual relationship between the parties. Those sit in the defect and dispute resolution space, which is dealt with in more detail in our article on rectification orders and Fair Trading in NSW.

Other issues are about whether the person who holds the licence behaved as the legislation requires. Those are conduct matters, and they are dealt with through the licensing and disciplinary framework rather than through an order to fix a wall.

The critical point for a builder is that these tracks are not mutually exclusive. A regulator can pursue a conduct matter whether or not the defect is ever rectified, and whether or not the homeowner ever gets their money back. Fixing the work does not automatically make the conduct allegation go away, and answering the conduct allegation does not stop a rectification order being made.

What the regulator can actually do

The disciplinary powers available to the regulator are broad, and they are aimed at the licence rather than the building. Depending on what is alleged and what is found, the outcomes can include a caution or reprimand, conditions placed on the licence, a requirement to complete further training or supervision, a monetary penalty, suspension of the licence, or cancellation.

Each of those has a different commercial effect. A condition on a licence can make it harder to obtain insurance or to satisfy a principal contractor that you are a safe subcontractor. A suspension stops you from doing licensed work for the period it applies, which means standing down subbies and explaining a stalled programme to clients. A cancellation ends the business as it is currently structured.

There is also a reputational layer that operates outside the formal outcome. Regulators publish disciplinary decisions. Prospective clients, head contractors and insurers search for them. A matter that is resolved without cancellation can still cost work years later.

The regulator does not need a consumer to be the moving party in every case. It can act on its own motion where it becomes aware of conduct that falls within the legislation. That means information from a site inspection, a compliance audit, an insurer, or a former employee can start a process that no homeowner ever complained about.

How a complaint actually moves through the process

Most builders imagine a complaint as a single event: something is lodged and something is decided. In practice it is a sequence, and the early stages are where the matter is usually shaped.

At intake, the complaint is assessed for whether it is something the regulator can deal with. Not every grievance is. A commercial disagreement about the quality of a finish might be a matter for the contract and the courts rather than for the regulator, while an allegation about unlicensed work or misleading conduct clearly falls within the licensing framework.

At assessment, the matter is sorted into the defect track, the conduct track, or both. This is the point at which a builder who has kept good records is at a significant advantage, because the regulator’s assessment is based on what the documents show.

During investigation, records are requested. Contracts, variations, insurance certificates, inspection records, photographs, emails and site diaries all become evidence. What is not in the file generally does not exist for the purpose of the investigation.

The response stage is where you get to answer the allegations in writing. This is not a conversation. It is a formal opportunity to put your account on the record, and it is the stage most builders handle badly because they treat it as an argument rather than a submission.

The outcome can be that the matter is closed with no action, referred to another process, or escalated to formal disciplinary action. Even a closed matter consumes time, legal cost and management attention.

What actually triggers disciplinary action

Disciplinary action is not limited to the spectacular cases. A significant proportion of matters arise from ordinary administration failures that compound over a project.

• Unlicensed or out-of-scope work. Doing work that falls outside the class or category of your licence, or allowing a subbie to do it under your banner.
• Insurance failures. Not taking out the required cover, letting it lapse, or being unable to produce a certificate when asked.
• Contract and disclosure failures. Failing to provide required documents before work starts, or failing to include required terms.
• Misleading conduct. Statements about qualifications, experience, insurance or timelines that turn out to be wrong.
• Failure to comply with a statutory direction. Ignoring a notice or an order that the regulator has issued.
• Record keeping. Being unable to demonstrate what was agreed, when it was agreed, and what was built.

Notice the pattern. Most of these are not about the quality of the trade work. They are about whether the administrative and disclosure obligations that attach to holding a licence were met. A builder can be a genuinely good tradesperson and still lose a licence over paperwork.

Security of payment is a separate regime

Builders often conflate payment disputes with licensing complaints, and this confusion costs money. The Building and Construction Industry Security of Payment Act 1999 (NSW) is a separate statutory scheme. It governs how progress payments are claimed and how disputes about them are resolved, including through adjudication.

The NSW Government’s guidance on security of payment for construction contractors sets out the framework, and the guidance on making a payment claim explains how a valid claim is put together.

The practical difference is this: a payment dispute is about money owed under a contract, and it is resolved through a process with its own notices and timeframes. A licensing complaint is about your conduct as a licence holder, and it is resolved through the disciplinary framework. Winning an adjudication does not dispose of a conduct complaint, and complying with a rectification order does not resolve a payment claim.

Where builders get caught is assuming that a commercial dispute will stay commercial. If a payment dispute involves allegations of misleading conduct, defective work, or a failure to comply with the contract, it can generate a conduct complaint as a by-product. The evidence you generate in the payment dispute becomes evidence in the licensing matter.

Records are the defence

By the time a complaint is made, the events it concerns are usually months or years in the past. Memory is unreliable, subbies have moved on, and the site has been covered up. The only reliable account of what happened is what was written down at the time.

The records that matter most in a conduct investigation are the ones that demonstrate you met your obligations as a licence holder, not just that you built the work correctly.

• A signed contract that includes the terms the legislation requires, with a date that shows when it was entered into.
• Evidence of the required insurance cover, current at the time work was carried out.
• Variations in writing, signed by the client, before the changed work was done.
• Site diaries and inspection records showing the sequence of work and who was on site.
• Photographs dated and tied to a stage of the build.
• Correspondence showing how you responded to concerns when they were first raised.
• Records of supervision of apprentices and subcontractors.

None of these are glamorous. All of them are the difference between being able to answer an allegation and having to accept it because you cannot contradict it.

Worked example: a complaint that becomes two

A builder in western Sydney completes a renovation on a period home. Several months after handover, the homeowner notices water damage near a new bathroom and writes to the builder. The builder responds promptly, inspects, and agrees to return and redo the waterproofing. From the builder’s point of view, the matter is a defect and it is being handled.

At the same time, the homeowner lodges a complaint with the regulator. In the complaint, alongside the waterproofing issue, they allege that the builder started work before providing the required insurance certificate, that a variation was added verbally and then invoiced, and that the builder’s registration details on the quote did not match the licence.

The builder fixes the waterproofing. The defect track is effectively resolved. But the conduct track is now running, and the builder’s response is that the waterproofing has been rectified. That is not an answer to the allegations about the certificate, the variation or the licence details.

The regulator requests the contract file. The builder produces a contract, but there is no dated insurance certificate, the variation was confirmed by text message with no signed variation document, and the quote shows a trading name that was never registered. The builder cannot demonstrate that the disclosure obligations were met, because the records do not show it.

The outcome is a set of conditions on the licence and a requirement to complete further compliance training. The waterproofing was fixed. The licence was still affected. The cost was not the rectification — it was the administrative failure, and it surfaced years after the work that caused it.

This is the pattern that recurs. The defect is the entry point. The conduct is what the regulator ends up assessing.

The commercial reality of a conduct matter

The direct costs of a disciplinary matter include legal representation, management time, and the cost of responding to requests for records. For a small builder, that can be the difference between a profitable year and a break-even one, and none of it is recoverable from the client.

There are indirect costs that are often larger. A suspended licence means you cannot legally enter into or perform licensed work, so contracts have to be paused, subbies stood down, and clients told. Insurance may become harder or more expensive to obtain. Head contractors who require a clean disciplinary record will stop putting you on tender lists.

There is also the programme effect. A disciplinary matter runs on the regulator’s timeline, not yours. You cannot schedule it around a busy period or a difficult build. It will require attention when it requires attention.

The builders who come through these matters with the least damage are not the ones with the best lawyers. They are the ones whose records already answer the questions, so the matter is closed at assessment rather than escalated.

What to do when a complaint lands

If a complaint is made against you, the first response matters. Treat it as a formal process from the outset.

• Read the complaint carefully and separate the allegations into defect issues and conduct issues. They need different responses.
• Do not respond informally or angrily. Anything you write may be relied on later.
• Pull the complete file for the job: contract, variations, insurance, approvals, diaries, photographs, correspondence.
• Identify what you can prove and what you cannot. Where you cannot prove something, work out what other evidence exists.
• Respond to each allegation specifically, in writing, with reference to the documents.
• Continue to meet your ongoing obligations, including any applicable continuing professional development requirements, while the matter is running.
• Keep the client relationship professional even if the complaint is contested.

On that last point, it is worth checking where you stand on your CPD obligations independently of the complaint. A disciplinary matter is not the time to discover a shortfall in your NSW builder CPD requirements, because a shortfall is itself a matter the regulator can act on. Our article on CPD shortfall and licence renewal consequences covers how that interacts with renewal.

Why this matters for how you run a job

The disciplinary framework exists because a licence is a privilege that carries obligations beyond competent trade work. The regulator is not only asking whether the building is sound. It is asking whether the person holding the licence can be trusted to meet the administrative, disclosure and insurance obligations that protect consumers.

That is why a conduct matter can survive the rectification of every defect on the job. The questions are about what you did and what you can show you did.

The practical response is not complicated, but it has to be habitual. Keep the file as the job runs, not after a complaint arrives. Put variations in writing before the work is done. Keep insurance certificates current and filed where you can find them. Date your photographs. Write down what was agreed in site meetings.

Builders who do this as a matter of routine find that complaints are closed quickly, because the file answers the question. Builders who do not find that a single complaint can consume a year and put the licence at risk. If you want to strengthen the compliance side of your practice before a complaint ever arrives, the PointCPD course catalogue covers the licensing, contract and records topics that these matters turn on.

Questions builders ask

• Compliance
• Disputes
• Licensing
• Regulators

Published 2 September 2026. General information for builders, not legal, financial or engineering advice for a specific job. Check current requirements with the relevant regulator or standard before relying on them.