The NSW Government is implementing reforms to its builders’ warranty scheme, including phasing out broker commissions.

The Home Building Compensation Fund (HBCF) is considered financially unsustainable and a raft of changes was announced late last year.

The National Insurance Brokers Association has been strongly critical of the removal of commissions, but its objections have been dismissed.

The HBCF says it “will cease paying commissions to distributors effective from April 3”.

“While we realise this will be unpopular with distributors, government-paid broker commission is considered an unnecessary cost for a mandatory monopoly product,” it says.

“Distributors will instead be able to adopt a fee-for-service model where they will charge builders with competitively set fees.”

The reforms will be implemented in stages over the next two years. Legislation is expected to be introduced to Parliament early this year to enable further changes.