The failings of the NSW building regulator have been laid bare in an ombudsman's report after a couple left with a $528,000 repair bill uncovered a builder's dodgy past with a simple internet search.
The two engaged the builder in December 2013 to construct a Sydney home after completing a licence check on the public register, which raised no cause for concern.
But by May 2014 they became worried the builder wasn't complying with the contract and complained to NSW Fair Trading, sparking mediation attempts that ultimately collapsed.
An assessment identified 102 defects in the work with the repair bill totalling almost $530,000.
After a basic ASIC search, the couple discovered the builder was an undeclared bankrupt, had previously been a director of failed companies and was the subject of many other complaints.
They complained to NSW Ombudsman Michael Barnes that the information on the public register was inadequate and that Fair Trading shouldn't have approved the man's contractor licence nor persisted with mediation.
In a report tabled in parliament on Wednesday, Mr Barnes slammed an "apparent lack of rigour in updating the public register" and questioned the "sufficiency of the licence renewal process".
At the time the man's licence was renewed in 2013, the regulator should have known he was bankrupt between 2006 and 2009 and had been the director of companies subject to court proceedings.
He'd also failed to inform Fair Trading when he took the latest directorship in 2011, and the company was the subject of eight complaints between 2011 and 2013.
"The evidence collected in this case suggests that the systems and processes of Fair Trading fall short of best practice and may be inadequate to protect consumers from unscrupulous builders, who are determined to take advantage of the system's weaknesses," Mr Barnes said in the report.
"Members of the public have a right to expect a high standard and robust checking procedures by regulatory agencies whose function is to protect the public."
He noted the home building sector was previously subject to an ombudsman investigation and parliamentary inquiry with the same issues arising despite repeated attempts to address them.
There were "serious and systemic issues with both the public register and the home building licensing system", Mr Barnes concluded.
His recommendations include changes to the public register, improvements in intelligence sharing and updating internal guidance for staff.
Fair Trading was also ordered to issue a formal apology to the complainants and make an "appropriate ex- gratia payment".