Victoria's troubled building watchdog will be scrapped but the homeowners it failed aren't getting compensation and won't benefit from its beefed-up replacement.
A report into the Victorian Building Authority, commissioned by chief executive Anna Cronin, has laid bare weak responses to complaints about builders' unprofessional or incompetent conduct.
Seven complex cases dating back to 2014 were independently examined by building industry regulation expert Bronwyn Weir.
The complaints were across 75 homes, of which 22 remain incomplete and four are still embroiled in legal action.
In one example, a family was slapped with a bill for an extra $2 million two years after signing a contract.
The contract was terminated after they paid the additional money as well as an extra $2.6 million to fix defects and finish construction.
One couple approaching retirement is yet to move into their "forever home" and are instead paying for alternative accommodation after complaining to the regulator in mid-2019, the report revealed.
All complainants have and continue "to suffer severe financial, emotional and physical distress".
"Every aspect of their lives has been negatively impacted," it said.
"They have watched their savings or superannuation be replaced with debts they cannot bear."
The treatment of complainants was slammed as dismissive and failed to recognise the trauma involved, the report said.
Some complainants were referred to as "emotional" or "stirring up trouble" in internal documents, others waited several weeks for a response and were then told they must reply within seven days or their complaint would be closed.
"The culture has been to push back on complainants' concerns and, if the complainant's behaviour became challenging, put them on 'contact management plans'," the report said.
Ms Cronin apologised to those who had been let down by the regulator's failings.
"We can and will do better," she said.
"We are learning from these past mistakes and already putting in place changes to become a more effective and trusted regulator."
The report makes 20 recommendations, including giving Victoria's new building watchdog the power to force builders to rectify work after homeowners have moved in.
Planning Minister Sonya Kilkenny said the Building and Plumbing Commission won't be hamstrung in the same way as its predecessor.
"New types of powers will give the regulator the power to direct builders to fix substandard work, both before owners move in and after they move in and beyond," she told reporters in Brunswick on Thursday.
While acknowledging families' hurt and pain, Ms Kilkenny signalled the new body would not be handed retrospective powers to direct builders to fix defects.
"Today is the line in the sand," she said.
"It is about recognising what has happened in the past is truly unacceptable and ... it should never ever happen again."
The minister repeatedly refused to be drawn on whether affected customers would be offered compensation.
Opposition housing spokesman Evan Mulholland said a new name and logo for the regulator would not fix systemic problems within Victoria's construction sector.
"Labor's 10 years of failure and mismanagement of the building industry has turned the great Australian dream into the great Labor nightmare," he said.
