Crisis at SPASA Queensland leads to warranty doubts and office sale

Thousands of warranties issued on the construction of domestic swimming pools in Queensland are in doubt because the industry peak body administering them has drained millions of dollars from the trust fund used to pay claims.

Customers having pools built by members of the Swimming Pool and Spa Association of Queensland Inc. (SPASA) each pay about $300 into a so-called 'Watertight' fund for a six-year warranty to ensure that if the builder dies or goes bust their pools will be finished and subsequent defects rectified.

However, it appears that a significant proportion of almost $7 million paid into the fund over the past 10 years has been used to support the loss-making National Swimming Pool Institute (NSPI) training venture aimed at providing professional development training to help pool builders qualify for Building Service Authority licences.

SPASA Queensland Chief Executive Adrian Hart assured customers claims would be honoured, despite having less than $30,000 left in the trust.

Hart told Brisbane newspaper The Courier Mail "the fund is treading water at the minute but we haven't had, nor do we expect, much in the way of claims."

Hart, who took over in October, has hired lawyers to investigate what happened to the trust fund under the previous management and has listed its headquarters building for sale at $1.6 million.

The Courier-Mail reported that that at one point the Trust had more than $500,000 in the bank, but by the end of 2011 the fund's only significant asset was a $500,000 loan to SPASA Queensland to buy its headquarters building in the Brisbane suburb of Newstead.

Since 2002 the trust has collected $6.8 million from customers, from which about $1.2 million has been paid out in claims.

About $2 million was transferred in 'grants' to the loss-making NSPI while some trust money was apparently used to fund the operations of SPASA Queensland.

Under the trust deed the only specified beneficiaries are SPASA Queensland members' customers.

The solicitors called in by Hart have apparently indicated that at this stage there is no evidence to indicate that any person has attempted to steal funds or personally benefited from these transactions. However, investigations are ongoing and the final situation will only be known once the former Chief Executive, external accountant and external auditors have been presented with a full brief of the relevant transactions and asked to explain their understanding of them.

SPASA Queensland also finds itself in a situation where it has to pay out employee entitlements for several staff members who are leaving or have left the organisation.

However, adequate provision for the entitlements has not been made, compounding the difficult financial situation.

SPASA Queensland is a non-profit trade association dedicated to maintaining and improving standards within the industry for the betterment of consumers, pool builders and suppliers.

Its Benefits Trust holds the funds for the Watertight scheme, which is intended to cover defects in work or to enable the completion of an eligible swimming pool in the event a builder dies or the building company is wound up.

The NSPI website currently says "all Construction Assessment and Training are currently undergoing a restructure. We are not taking any new enrolments in the foreseeable future."

For more information go to www.spasa.com.au