Self-Regulation for Renewable Businesses Will Be the Future – Find out Why?

AGE UK recently released a very hard-hitting press release highlighting that the cuts to Trading Standards are leaving older people vulnerable to fraud and that elderly people are five times more likely to be hit by fraud than be burgled. The figures detailing the cuts do not make good reading with some areas having experienced 60% cuts.

As a former Trading Standards Officer, I witnessed first-hand the cuts. The County Council where I started my career at had 120 Officers ‘doing the right thing’ but this has now dropped to just 30 Officers. However, the need for consumer advice and help with problems has not diminished, meaning that consumers are losing out.

Specifically, in the Home Improvement market, the Citizens Advice consumer service received 40,000 complaints in 2016 (source)

So, what are the options for protecting consumers?

It is unlikely that we will ever return to the good old days of ‘consumerism’ where trading standard’s offices had large teams of specialist advisors who could answer and assist in any consumer complaints, and some even had walk-in centres that were fixtures of the high street. One great solution is effective regulation through codes of practice. Codes of practice regulating industries are not a new idea, having been first mentioned in the Fair Trading Act 1973. However, it was not until the early 2000’s that the Office of Fair Trading (since abolished) established the Consumer Codes Approval Scheme. Critics of consumer codes state that they are biased and lack teeth, neither of which is true.

The advantages of self-regulation are:

  • The industry brings its own expertise and knowledge to shape the regulation required
  • Rules and regulations can quickly change
  • There are no costs for taxpayers as the schemes are almost always self-funding
  • As long as consumer protection is at the core of the business, then consumers will always be protected and not left short
  • It avoids long-winded formal consultation processes that are required to lead towards legislation

Not all codes of practice and assured traders schemes are the same

Firstly, it’s important to know the difference between a code of practice (COP) and an approved trader scheme (ATS). An ATS is an organisation, sometimes endorsed by a public body such as trading standards, where traders apply to join and prospective members are rated or assessed against specific criteria which could include fair terms and conditions etc. A COP is a detailed document which traders can subscribe to, it should set very high standards to which traders must reach.

The Chartered Trading Standards Institute, which we belong to sets a very high standard for consumer code sponsors and to become an approved consumer code, we had to show that we will reduce consumer detriment.

In recent years there has been an explosion in the number of ATS and like the Insurance comparison industry, they are all vying for consumer attention through catchy jingles and slick catchphrases. We welcome schemes that contribute towards improving industry standards, but the fact remains that anybody can set up an ATS or COP without having to reach any particular standard. We think that should be changed.

Why we should not just have one body overseeing the entire consumer protection landscape

Trade associations whether they operate an ATS or COP bring their expertise and knowledge of the market with them in order to reduce consumer detriment. Throughout our time in operation, we have learned how to quickly, fairly and impartially resolve consumer complaints. Consumers should not be left for long periods of time experiencing more stress and upset, whilst an ATS who has no knowledge or expertise must go away and find experts and get up to speed in a particular area. For example, on average we resolve complaints for consumers in just 7 days.

Recommendations to Government

HIES’ leadership have been providing quality assurance services since 1996 and believe codes of practice should be mandatory across the home improvement sectors. We recently dealt with a consumer who had been to no less than 7 other bodies before she received redress through HIES. This got us thinking over our years of experience about what ‘good’ looks like. After careful consideration, we thought that it’s best that we decide on some principles.

We would happily engage with other bodies and the government to develop a standard.

The 7 principles we are recommending to Government are:

  1. All home improvement businesses are members of an industry sector Code of Practice (COP)
  2. All consumers are registered with the installer’s COP (so the Code has oversight)
  3. The COP writes to every consumer entering into a contract with a member (above, say, £350 contract value) letting them know of the protections in place and also asking for feedback on the installer’s performance
  4. The COP has a responsibility to provide free mediation, free inspections and free ADR/Ombudsman protection if there are any disputes with its members. Quick timeframes for resolution should be in place
  5. The COP cannot ‘lose its responsibility’ if the installer is no longer a member
  6. The COP should police and audit to ensure that all consumers have their deposits and guarantees protected by insurance should the installer cease to trade (and keep records of this)
  7. The COP should police that all ‘performance calculations’ given by installers are verified and audited and if the performance calculations are found to be incorrect, obtain effective redress for the consumer

Things cannot stay the same and consumers need quality protection through high, agreed standards.

Featured image by timokefoto from Pixabay