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HIES respond to BEIS Modernising Consumer Markets Green Paper


HIES has been resolving consumer complaints in the renewable industry since 2015 and over 90,000 consumers have benefitted from the reassurance that if their installer can’t or won’t help them with their complaint – we will.

We responded to questions 12 to 15, which concerned Alternative Dispute Resolution (ADR). We believe that consumers should have access to free, speedy ADR which is conducted by subject matter experts who know the market and how to skilfully and fairly resolve consumer complaints. The green paper can be found at https://www.gov.uk/government/consultations/consumer-green-paper-modernising-consumer-markets

We have proposed a dispute resolution model which is based around consumer education and enforcement of the standards. In our experience, any scheme which cannot robustly police its members will struggle to show that it has any effect on the industry that it self-regulates.

Consumer Protection


Response to consultation questions

12. How can we improve consumer awareness and take-up of alternative dispute resolution?
Currently, the law regarding traders mentioning ADR to consumers is confusing. As it stands, a trader should point a consumer towards an ADR scheme, but the trader is not obliged to use it.

We feel that ADR schemes should be closely linked to consumer advice and education. Consumers should feel that membership of an approved ADR scheme or Ombudsman is a driver of choice as they feel that they will be protected before, during and after purchase. Traders should be proud to be members of a scheme and prominently display it in marketing literature, at the point of sale etc. It should be noted that the Consumer Contracts Regulations 2013 places specific obligations on traders to declare membership of a code of conduct or ADR scheme.

Consumers should be made aware of the benefits of ADR over going to court:

  1. ADR schemes are usually subject matter experts who specialise in consumer redress, meaning that the ADR advisor is likely to understand the technical details of the complaint
  2. There is usually no cost for the consumer to access ADR
  3. ADR can be significantly less time-consuming than going to court, for example, our average time to resolve complaints through our HIES scheme is just 7 days

In our experience, businesses want to get things right and going through the ADR process helps them improve their service to consumers.

Although businesses can charge a nominal fee for consumer access to ADR, we believe that the average consumer would be put off by this. So, to promote ADR to consumers, access to ADR should be free.

Response to consultation questions
An ideal ADR provision would consist of consumer education and enforcement.

A consumer who comes to us in the first instance will be advised and educated on how to resolve their complaint. If this is unsuccessful then we can get involved and contact the trader on the consumer’s behalf.

For enforcement, ADR can help. It is often a welcome alternative to Government regulation and can be achieved at no cost to the tax-payer. An example of where enforcement works well is in the renewables sector. A trader who sells renewable heating or electric systems to consumers must be a member of a recognised consumer code. Failure to do so will mean that the customers will not be able to access Government incentives. Traders who generate numbers of complaints, fail to take part in ADR, or disregard Ombudsman decisions, can find themselves taken off our scheme. We, along with the other consumer codes in operation in this market, have all signed up to a memorandum of understanding (MoU) to stop businesses code-hopping when they generate several complaints. Without membership of an approved consumer code, a trader cannot operate in this market.

Without robust enforcement, either through agencies such as trading standards or through industry policing themselves, self-regulation and ADR could fail.

14. How could we incentivise more businesses to participate in alternative dispute resolution?
In our experience, those businesses that are generally compliant and positive about consumers are already likely to be a member of an ADR scheme.

Businesses would only be incentivised to join voluntary ADR schemes if they were able to see significant financial or operational efficiency savings, which could be achieved through effective Government campaigns and case studies. The only alternative is to make ADR mandatory on an industry by industry basis.

We believe that ADR should be compulsory where there is evidence to show any of, or a combination of:

  1. High levels of consumer detriment
  2. Low levels of enforcement from statutory bodies
  3. Large numbers of vulnerable consumers

15. Should there be an automatic right for consumers to access alternative dispute resolution in sectors with the highest levels of consumer harm?
Yes. Where there are high levels of detriment there should be an automatic right to ADR. Government Policy should be flexible in this area to consider emerging threats.

We look forward to seeing the results of the green paper response and are happy to share our expertise with Government through working groups.

If you have any further questions or would like to know more, please contact Adrian Simpson a.simpson@hiesscheme.org.uk

 

 

Image source: Pixabay.com

Assignment of Rights: What's it all about?


The Assignment of Rights came into force on the 27th June 2018. It’s a new method to help households finance a renewable heating system. This will hopefully allow homeowners to benefit from a more efficient heating and hot water system. So, what is involved in the Assignment of Rights and how does it work? Hopefully, this blog will help you understand.

What is Assignment of Rights?
The Department for Business, Energy & Industrial Strategy (BEIS) is providing an option to help consumers overcome the barrier of the upfront cost of a renewable heating system, such as air source heat pumps, by introducing the Assignment of Rights which came into force on the 27th June 2018. This allows an ‘investor’ to help fund the initial cost of installing a renewable heating system and then the applicant would assign their Renewable Heat Incentive (RHI) payments to this investor. The applicant should then benefit from a reduction in heating costs and would also be the owner of the system. An applicant to the scheme can be a householder, landlord or social landlord.

How does Assignment of Rights work?
The registered investor and applicant enter into an agreement, then the heating system is purchased and installed. The applicant applies to Ofgem and as part of the application process nominates the registered investor, then if successfully accredited, the nominated registered investor receives the RHI payments for 7 years. The applicant will own the equipment from the beginning.

What’s in it for Applicants?
The key reasons why an applicant would look at having a renewable heating system installed is:

  1. applicant benefits from having a brand new system
  2. the potential running cost of the new system should be lower than their current heating system, thereby benefiting from a reduction in energy bills

It’s important that applicants make an informed choice. Just because you could have a new system installed for next to nothing doesn’t mean you should have it. It’s important to look at your motivation for having the new system. Your first step could be to look at your existing heating system and evaluate its efficiency – you can generally do this by age and also if you have an Energy Performance Certificate it could show you how fuel efficient your existing system is and the potential savings from having a new system installed. Another important factor is what’s the new system going to cost you to run compared to your existing system? This is something you need to be aware of because if you have the new system installed it could potentially cost you more money to run than previously. A new renewable heating system is a good idea but for the right applicant.

Applicants should also bear in mind that they have ‘ongoing obligations’ which are explained in more detail at https://www.ofgem.gov.uk/environmental-programmes/domestic-rhi/participants/ongoing-obligations. The ongoing obligations are the applicant’s duties and responsibilities under the RHI scheme.

A participant must comply with the ongoing obligations for the investor to receive DRHI payments and avoid enforcement action. Applicants will also need to declare annually that they are still compliant with the ongoing obligations.

What’s in it for Investors?
An investor will generally finance the purchase, installation and maintenance of renewable heating systems for households in exchange for receiving the RHI payments. Investors will generally be looking for a return on investment and may even have a figure in mind, e.g. 5-10% return on investment. This means that the investor will need to consider many different elements of a potential installation, including the cost of the equipment, the cost to install and what maintenance is required for the upkeep of the system. This all means that an investor who has undertaken due diligence should have a model whereby certain property types with certain existing heating systems will not meet their criteria. This will hopefully mean that the deployment of renewable heating systems is undertaken in a controlled manner where the applicant is satisfied, and the investor receives a return on their investment.

To take part in the Domestic Renewable Heat Incentive (DRHI) scheme, investors must demonstrate that the installation meets the following:

  1. the equipment is on the DRHI Product Eligibility List – see https://www.ofgem.gov.uk/publications-and-updates/domestic-renewable-heat-incentive-product-eligibility-list-pel.
  2. an Energy Performance Certificate (EPC), less than 24 months old at the time of installation may be needed for the property where the equipment will be installed. If significant changes have taken place to the property since the EPC was issued, you may need another EPC.
  3. a Microcertification Scheme (MCS) installation certificate number for the heating system.
  4. that the investor is a member of a Chartered Trading Standards Institute (CTSI) Approved Consumer Code, if applying under the Assignment of Rights scheme.

What’s HIES involvement in Assignment of Rights?
A potential investor under the Assignment of Rights will need to be a member of a Consumer Code and also register with Ofgem. HIES is a Chartered Trading Standards Institute (CTSI) Consumer Code and will require investors to go through an accreditation process which will involve us looking at:

  1. how they will generate leads
  2. their sales process
  3. the equipment to be used
  4. the design and installation process
  5. their aftercare customer service

We will also look at a copy of their model contract and may even require a third party to look at it from a consumer law viewpoint and provide HIES with sign off. Once approved by us, investors can make an application to Ofgem to become a ‘registered investor’. We want to ensure that applicants receive accurate information and therefore will be looking at any investors who are members of HIES to also join The Energy Performance Validation Scheme (EPVS) to have each contract independently checked.

Further information
Ofgem has released an assignment of rights guide which you can access by clicking here.

 

Have a question?
Call us on 0344 324 5242
Or send an email to communications@hiesscheme.org.uk

HIES Supports the Federation of Master Builders' (FMB) ‘Raising the Bar’ report

 

"It would be unthinkable to buy a car for £50,000 without a warranty, yet for building works of a similar value not taking out a warranty remains common, if not standard, practice” says the Federation of Master Builders (FMB) in their ‘Raising the Bar Report’ report which looks to increase standards of quality and professionalism in the building trade.

undefinedWhen we have work done on our homes, we expect it to be carried out with reasonable care and skill and that the traders will return day after day to finish the job, and that there is some recourse if things go wrong. Many consumers will not realise their protection comes in the form of the Consumer Rights Act 2015 (CRA) which was based on the Supply of Goods and Services Act 1982. The CRA is based on principles, trust and giving the trader the opportunity to correct any issues. There is no requirement to provide any sort of protection in case the trader dissolves or refuses to come back to correct issues. The consumer can be left alone with the daunting and stressful possibility of court action looming. How can the consumer be confident that the work was carried out correctly in the first place?

Despite comprehensive protection for consumers under the CRA, it is a sad fact that problems still exist in the RMI (repair, maintenance and improvement) industry and we want to improve the situation. As with all consumer protection systems stringent and clear rules are good but without effective enforcement and consumer education, they could fail.

We want to reduce consumer detriment and raise industry standards.

The FMB have proposed the following principles:

  1. A licensing system for all construction firms
  2. Mandatory warranties for building control approved work
  3. A new ‘general builder’ qualification

Licensing

In countries such as Australia, certain trades are required to carry a licence. Although the requirements vary from state to state, the application examines areas such as financial position, knowledge and police records. We already undertake stringent checks on our members as we only want to accept those members that want to raise standards and reduce consumer problems.

We understand that these checks do not guarantee the work will always be carried out to a high standard, but they go some way to ensuring the trader is competent and knowledgeable.

Mandatory warranties for building control approved work

The report suggests that existing building regulations should be adapted to ensure that a 24-month warranty is included for building work. We would suggest we look a little bit further and not just make it part of the building control regulations, but incorporate the requirement to provide warranties for all RMI work, although how this could be enforced and whether this should be for absolutely every RMI job (some of which can be very small) is still up for debate.

A new general builder qualification

Absolutely anybody can call themselves a builder and go into people’s houses and carry out work. Although there’s a lot to be said for entrepreneurship and getting people into the building trade, consumers’ confidence would be greatly increased if they knew that the person working in their home had a minimum level of competence.

In summary, we are supportive of this campaign and want to see consumers happy with the quality of the builders’ work, but we would like to ensure that the licensing is enforced. There are methods of doing this, either through legislation, or as is more common now self-regulators taking the lead and being responsible for the vetting, ongoing accreditation and enforcement.

Launch event

HIES are pleased to have been invited to the launch event on the 2nd July at the House of Lords, follow our Policy account @hiespolicy for updates on the day.

 

 

Have a question?
Call us on 0344 324 5242
Or send an email to communications@hiesscheme.org.uk

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