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The Singapore Law Gazette

Hammering in the Need for Greater Consumer Protection

The issue of renovation fraud and consumer protection is a hot topic for many Singaporeans, especially for young couples who have just bought their first property, and looking to turn it into their dream home.

Unfortunately the renovation journey is often fraught with perils and more can be done for consumer protection to be enhanced in the renovation industry. Some suggestions include the regulation of the renovation industry (such as for property agents), or enhancing consumer awareness or protection through standardised quotations (such as the energy market) or increasing professionalism of the renovation industry.

This process should not be this painful” I thought to myself, as I pored through 20 sets of quotations and supporting documents of varying lengths, and compared the various items and services provided by different interior design firms (ID firms), or also known as renovation firms.

I had the good fortune of becoming a first-time homeowner recently, with the logical next step being to plan for renovation works in the hopes of creating my dream home. As I did not have the time and talent to project manage the process, and generally lacked a creative bent, I decided to approach ID firms. Little did I know, I was in for a roller-coaster adventure.

My wife and I spoke to about 20 ID firms with a majority of them providing us with proposed layouts and quotations. Readers at this point would be thinking, “Ah Jasper, you should not have spoken to so many ID firms!”. However, should homeowners be faulted for finding ID firms that fit one’s budget and purpose, with as little “hidden costs” as possible, and whose design ideals are congruent with theirs?

My anxiety was further heightened when I visited Telegram group chats, online forums and social media sites to glean wisdom from other homeowners who shared their experiences. I realised that the journey of renovating a home could be filled with traps and pitfalls which would teach me a painful financial lesson should I be caught unawares.

Problems with the Renovation Industry

One cannot avoid horror stories about the renovation industry.1See Adriano, “An Inside Look Into The “Shady” Renovation/ID Industry In Singapore: Here’s How It Really Works” Stacked Homes <https://stackedhomes.com/editorial/an-inside-look-into-the-shady-renovation-id-industry-in-singapore-heres-how-it-really-works/#gs.vubsu6> (accessed 06 April 2022). It is rife with stories of ID firms winding up, committing criminal breaches of trust, defrauding customers and handing over shoddy or partially completed work.2See Lean Jinghui, “S’porean couple paid S$28,700 for renovation works that never began, refund delayed for months” Mothership <https://mothership.sg/2022/03/renovation-id-company-scam/> (accessed 06 April 2022). In November 2021, celebrity couple Qi Yuwu and Joanne Peh went public with their renovation woes and called for “… regulation or more transparency to protect both homeowners and the industry builders/contractors…”.3Toh Ziyi, “Joanne Peh Alludes She Was Conned By A Contractor While Renovating Her House; Sparks Fierce Discussion Among Netizens” 8 Days <https://www.8days.sg/entertainment/local/joanne-peh-alludes-conned-by-contractor-home-renovation-15451344> (accessed 06 April 2022).

This issue with black sheep in the renovation industry is not new. In 2016, Member of Parliament Lee Bee Wah, had raised the issue with the Minister of National Development (MND) about greater regulation of home renovation contractors, such as a minimum entry level for such contractors, and whether the MND will consider requiring such companies to post a bond before they are allowed registration with the Housing & Development Board (HDB) or Building & Construction Authority (BCA).

Unfortunately, the Minister in his reply stated that “both BCA and HDB do not regulate the quality and schedule of renovation works” and that “these are contractual issues between the contractor and their client”.4Ministry of National Development, “Written Answer by Minstry of National Development on regulation of home renovation contractors” Ministry of National Development <https://www.mnd.gov.sg/newsroom/parliament-matters/q-as/view/written-answer-by-ministry-of-national-development-on-regulation-of-home-renovation-contractors> (accessed 06 April 2022).

In recent times, statistics provided by the Consumer Association of Singapore (CASE) showed that 1,300 complaints were filed in 2021 with one in two claiming that projects were not completed on time or had unsatisfactory workmanship.5Adeline Tan, “Complaints against renovation contractors rose by almost 50% last year from 2020: Case” The Straits Times <https://www.straitstimes.com/singapore/consumer/Complaints-against-renovation-contractors-spike-by-almost-half> (accessed 06 April 2022).

Consumer Protection

How are consumers and clients in the renovation industry protected under our current laws?

Consumer protection can be divided into upstream and downstream parts in a renovation project’s workflow – the upstream being consumer protection efforts that are in place before the engagement of ID firms or renovation contractors, and the downstream being avenues for consumers to seek redress in the event of a dispute after engagement.

The Consumer Association of Singapore (CASE)

CASE plays a vital role in both the upstream and downstream portions of consumer protection.6CaseTrust, “Casetrust for Renovation Companies” Casetrust <https://www.casetrust.org.sg/accreditation-detail.aspx?id=4> (accessed 06 April 2022). First, the CaseTrust for Renovation Businesses scheme provides a measure of confidence for consumers as accredited renovation firms will protect a customer’s deposit through a deposit performance bond to safeguard against closure, winding up and/or liquidation. These firms will also adopt a CaseTrust Standard Renovation Contract to ensure cost transparency and accountability.

Second, firms can also apply for double accreditation under CASE and the Singapore Renovation Contractors and Material Suppliers Association (RCMA) Joint Accreditation scheme where higher standards will apply and consumers can feel more assured.

Third, CASE maintains an alert list to warn consumers against potentially dodgy ID firms. Recently, CASE issued alerts against three different renovation contractors after receiving 21 complaints collectively against these contractors.7Rosalind Ang, “Case issues alert against 3 renovation contractors after getting complaints over uncompleted work” The Straits Times < https://www.straitstimes.com/singapore/housing/case-issues-alert-against-3-renovation-contractors-after-getting-complaints-over-uncompleted-work> (accessed 12 June 2022).

Fourth, CASE provides an avenue for complaints to be lodged, and the CASE Mediation Centre is available to assist parties with dispute resolution.8Consumers Association of Singapore, “CASE Mediation Centre” Casetrust <https://www.case.org.sg/complaint_mediation.aspx> (accessed 06 April 2022).

Unfortunately such accreditation by CASE and RCMA is on a voluntary basis only. Amongst the ID firms, only 99 are accredited by CASE under CaseTrust for Renovation Businesses while a mere 39 are accredited under the CaseTrust-RCMA Joint Accreditation scheme. Accreditation and inclusion under such schemes may translate into higher business costs and/or less price competitiveness, which may become disincentives for ID firms despite the schemes’ potential as a confidence booster to clients.

Further, the alert list may not be effective for ID firms which have ceased operations – it is not uncommon for such ID firms to sprout elsewhere under a different name.

HDB’s Requirement

HDB homeowners are legally obliged to engage a HDB-registered renovation contractor. Renovation contractors who are unlicensed will be guilty of an offence under the Housing and Development (Renovation Control) Rules.9See Housing and Development (Renovation Control) Rules. Despite this, a consumer protection gap is still present as ID firms (a sizeable portion of whom are not registered with HDB), regularly engage sub-contractors who are themselves registered with HDB and will apply for renovation permits using their company name. ID firms are thus excluded from regulatory oversight on this front.

Small Claims Tribunal and other Legal Avenues of Redress

As with any financial dispute, aggrieved consumers may file a case with the Small Claims Tribunal (SCT) or file a civil suit in the courts to seek redress. The average layperson may find it difficult to act in person and may not have the means to retain counsel for a lawsuit – especially since they are already suffering financially from badly performed renovation works.

Further, a lawsuit seeking redress may not be the best way to solve issues since consumers may urgently need move into their homes and time may be of essence.

Also, where multiple contractors are involved, it may be difficult to procure evidence to prove one’s case and attribute blameworthiness (and financial liability) on the correct party in order to receive any form of redress.

The Way Forward

So what kind of improvements can we hope for, for the protection of consumers?

To Regulate or Not to Regulate

How about regulating the entire industry? This seems to be an instinctive response to most of the problems faced by society.

Regulation of an industry has its pros and cons. On one hand, it can provide a solid statutory framework enshrining consumer protection, a structured complaints process and a strong governmental push to professionalise participants in the industry. However, this might result in the curtailing of market forces and allegations of an overly paternalist approach towards the industry.

That being said, the state of the renovation industry bears some similarities to the real estate agency industry prior to its regulation. The real estate agency industry was once regarded as a “cowboy industry10Asiaone Business, “Real estate no longer a cowboy industry: Khaw” Asiaone <https://www.asiaone.com/real-estate-no-longer-cowboy-industry-khaw> (accessed 06 April 2022). with reports of vulnerable consumers being taken advantage of by real estate salespersons.11See Hansard, Estate Agents Bill No.11 of 2010 at col. 1082. Similarly both the acquisition of a property and its subsequent renovation can come at a high financial cost – as such, some degree of protection for consumers will be welcomed.

In response to the said “cowboy industry”, legislators saw fit to set up the Council for Estate Agencies (CEA) in 2010. The CEA is a statutory body under the MND and charged with the responsibility of increasing the professionalism of the industry and to safeguard consumers’ interests. The real estate agency industry was statutorily regulated with a licensing regime for fit and proper persons, while errant property agents were taken to task. Recent public perception surveys have shown that complaints are on a general downward trend with consumers expressing greater confidence and trust in the industry.12See CEA’s 2018 Public Perception Survey on the real estate agency industry <https://www.cea.gov.sg/docs/default-source/module/pressRelease/03fc2160-33c4-4527-baf0-ca6b9254ba1d.pdf>

Such an approach, however, may presently be a step too far for the renovation industry. Minister for Law, Mr K Shanmugam, had reiterated in Parliament in April 2021, that “it is caveat emptor” and that “consumers are therefore encouraged to conduct due diligence and proper research, so that they can make informed purchasing decisions”.13See Hansard, Official Report (5 April 2021) at col 8 of Written Answers To Questions, <https://sprs.parl.gov.sg/search/fullreport?sittingdate=05-04-2021> (accessed 08 April 2022) It seems that formal regulation of the renovation industry is not on the books just yet. If, however, our legislators eventually deem it fit to formally regulate the renovation industry, the regulation of the real estate agency industry may have some lessons to teach us.

Increasing Transparency in the Industry

As mentioned, I had a major headache when I was comparing quotations between different ID firms. There was no standard contract – inclusions and exclusions frequently differed. Understandably so as renovation work is highly subjective and customisable. However, what is not said in the quotation might be even more important than what is said and included.

Despite this, a case can still be made for some components of the quotation to be standardised for easy comparison by consumers.

One can turn to the Energy Market Authority (EMA) and the Open Electricity Market (OEM) for inspiration. Retailers in the OEM are obliged, under the EMA Code of Conduct14See EMA Code of Conduct for Retail electricity Licensees <https://www.ema.gov.sg/cmsmedia/Code%20of%20Conduct%20for%20Retail%20Electricity%20Licensees_Nov%202018.pdf>, to publish a Fact Sheet to show a comparison of price plans offered by the different OEM retailers.

A quick glance at this Fact Sheet (available on the different OEM retailers’ websites) reveals that details such as price plan, price, contract duration, various fees, deposits and late charges can be easily identified and compared.

ID firms could provide a fact sheet with items such as, and not limited to, whether a quotation includes design or project management fees, deposit sums required, payment schedules, GST-inclusivity, warranty period and dispute resolution mechanisms etc.

This may not be a perfect solution but it provides transparency by simplifying quotations and contracts for consumers.

Increasing Professionalism of the Industry

In my search for an ID Firm, it was my preference to engage a firm with interior designers who are interior design-trained with knowledge of space planning (as opposed to sales designers whose main mission is to close deals and usually do not have formal qualifications in interior design).

It will be advantageous for designers or salespersons to have basic training in interior design. Some work is already underway in this regard, with the Society of Interior Designers launching a new accreditation scheme for interior designers.15Rosalind Ang, “New accreditation scheme for Singapore interior designers will benefit consumers” The Straits Times <https://www.straitstimes.com/singapore/jobs/first-accreditation-scheme-in-singapore-launched-for-interior-designers> (accessed 08 April 2022).

Whether this is enough to transform the renovation industry remains to be seen. More can be done by the industry associations to engage students who are learning the trade, both academically and professionally by providing apprenticeship and internship opportunities, as well as courses for sales designers to upskill themselves.

Conclusion

More can certainly be done to professionalise the renovation industry, improve consumer confidence, and strengthen consumer protection so that the route to a dream home need not be traversed on a highway to hell. It seems that there will be brighter days ahead as the government has recently signalled that the Ministry of Home Affairs will be looking into legislative amendments to make it easier for renovation fraud to be established.16Wong Shiying, “MHA to study amending law to make it easier to establish renovation fraud” The Straits Times < https://www.straitstimes.com/singapore/mha-to-study-amending-law-to-make-it-easier-to-establish-renovation-fraud> (accessed 04 July 2022).

As for me, I am crossing my fingers and hoping that I have made the right choices.

Endnotes

Endnotes
1 See Adriano, “An Inside Look Into The “Shady” Renovation/ID Industry In Singapore: Here’s How It Really Works” Stacked Homes <https://stackedhomes.com/editorial/an-inside-look-into-the-shady-renovation-id-industry-in-singapore-heres-how-it-really-works/#gs.vubsu6> (accessed 06 April 2022).
2 See Lean Jinghui, “S’porean couple paid S$28,700 for renovation works that never began, refund delayed for months” Mothership <https://mothership.sg/2022/03/renovation-id-company-scam/> (accessed 06 April 2022).
3 Toh Ziyi, “Joanne Peh Alludes She Was Conned By A Contractor While Renovating Her House; Sparks Fierce Discussion Among Netizens” 8 Days <https://www.8days.sg/entertainment/local/joanne-peh-alludes-conned-by-contractor-home-renovation-15451344> (accessed 06 April 2022).
4 Ministry of National Development, “Written Answer by Minstry of National Development on regulation of home renovation contractors” Ministry of National Development <https://www.mnd.gov.sg/newsroom/parliament-matters/q-as/view/written-answer-by-ministry-of-national-development-on-regulation-of-home-renovation-contractors> (accessed 06 April 2022).
5 Adeline Tan, “Complaints against renovation contractors rose by almost 50% last year from 2020: Case” The Straits Times <https://www.straitstimes.com/singapore/consumer/Complaints-against-renovation-contractors-spike-by-almost-half> (accessed 06 April 2022).
6 CaseTrust, “Casetrust for Renovation Companies” Casetrust <https://www.casetrust.org.sg/accreditation-detail.aspx?id=4> (accessed 06 April 2022).
7 Rosalind Ang, “Case issues alert against 3 renovation contractors after getting complaints over uncompleted work” The Straits Times < https://www.straitstimes.com/singapore/housing/case-issues-alert-against-3-renovation-contractors-after-getting-complaints-over-uncompleted-work> (accessed 12 June 2022).
8 Consumers Association of Singapore, “CASE Mediation Centre” Casetrust <https://www.case.org.sg/complaint_mediation.aspx> (accessed 06 April 2022).
9 See Housing and Development (Renovation Control) Rules.
10 Asiaone Business, “Real estate no longer a cowboy industry: Khaw” Asiaone <https://www.asiaone.com/real-estate-no-longer-cowboy-industry-khaw> (accessed 06 April 2022).
11 See Hansard, Estate Agents Bill No.11 of 2010 at col. 1082.
12 See CEA’s 2018 Public Perception Survey on the real estate agency industry <https://www.cea.gov.sg/docs/default-source/module/pressRelease/03fc2160-33c4-4527-baf0-ca6b9254ba1d.pdf>
13 See Hansard, Official Report (5 April 2021) at col 8 of Written Answers To Questions, <https://sprs.parl.gov.sg/search/fullreport?sittingdate=05-04-2021> (accessed 08 April 2022)
14 See EMA Code of Conduct for Retail electricity Licensees <https://www.ema.gov.sg/cmsmedia/Code%20of%20Conduct%20for%20Retail%20Electricity%20Licensees_Nov%202018.pdf>
15 Rosalind Ang, “New accreditation scheme for Singapore interior designers will benefit consumers” The Straits Times <https://www.straitstimes.com/singapore/jobs/first-accreditation-scheme-in-singapore-launched-for-interior-designers> (accessed 08 April 2022).
16 Wong Shiying, “MHA to study amending law to make it easier to establish renovation fraud” The Straits Times < https://www.straitstimes.com/singapore/mha-to-study-amending-law-to-make-it-easier-to-establish-renovation-fraud> (accessed 04 July 2022).

The Law Society of Singapore
E-mail: [email protected]

Jasper is a Regulatory Counsel with the Law Society of Singapore, and was a prosecutor with a statutory board in his previous life. Jasper loves writing and talking about the law, and hopes his contributions will spark much needed discussions about important topics affecting everyday life.