Careful oversight of the Green Deal is needed to prevent breaches of the code of conduct leading to the swift discrediting of the concept
Today’s news that EDF has been fined £4.5m for mis-informing customers when selling their products highlights a major threat to the success of the Green Deal.
The Green Deal is a new and complex concept that householders and small businesses will never have encountered before. It includes unfamiliar technical measures, a completely new financial mechanism, and a form of billing never before been experienced by customers.
The aspirations are high. But so too are the risks. The last thirty years has seen a string of high-profile scandals involving the deliberate mis-selling of other financial products. Personal pension plans, endowment mortgages, payment protection plans: the list of shame goes on.
The doorstep selling practices of the big energy companies, seeking to persuade customers to switch supplier, have been found to have misled customers grossly, and have only finally been stopped after action in the courts. Today’s case is just the latest chapeter.
During the critical initial period, a failure to provide high standards of service will inevitably result in a swift discrediting of the Green Deal concept, threatening this mechanism’s potential to revolutionise the energy efficiency market in the way that is intended.
Measures will need to be in place to protect vulnerable customers from being inveigled to take on a finance package that may leave them worse off financially
From the outset, there must be an oversight framework that is tough enough to prevent deliberate deception.
Market research carried out by Ipsos MORI clearly identified that, among vulnerable householders in particular, many simply did not understand the concept of the Green Deal, even when it had been explained in great detail by trusted individuals.
We have to accept that this unfamiliarity, coupled with the inevitable low level of technical understanding by customers, does create an enormous risk of mis-selling by Green Deal Providers.
Once any energy saving item has been installed, the proposed redress system seems adequate for dealing with customer complaints regarding overt problems. The guidelines set out in the code of practice provide some worthwhile protection for householders. But these can only be effective if Green Deal providers adhere to them fully. It is far from clear what level of direct oversight of Green Deal providers’ selling practices will be carried out.
The consultation document announces that products being recommended and installed as part of the Green Deal will be spot checked by an “oversight body”. There is as yet no detail, however, as to which body will undertake the very necessary spot checks.
Unless it is mandated, inevitably householders will be unaware of the existence of, let alone any requirements of, the code of practice - and so will be unable to judge whether this code is being delivered acceptably. Therefore, the crude numbers of “customer complaints received” cannot - indeed must not - be relied upon to measure the trustworthiness of the Green Deal provider market.
The oversight body should be required to deliberately assess a sample of Green Deal providers’ and their sales people’s practices each year. We will also need reassurances as to just how well this will be resourced.
Potentially, we are looking at a massive power imbalance between the providers and their potential customers. At minimum, the government will need to publish details of all of the information that a Green Deal provider is required to explain to any prospective customer, together with a list of suggested questions that the Green Deal provider should be able to answer. I would propose that this information be available from the remote advice service which is due to be created, and then automatically given to customers during the process of carrying out a Green Deal assessment.
Specific measures will need to be in place to protect vulnerable customers, indeed all those at risk of fuel poverty, from being inveigled to take on a finance package that may yet leave them in a worse financial position. I suspect that certain neighbourhoods may simply have to be designated as “no cold calling zones”, which must be out of bounds to conventional Green Deal providers.
Particularly in the early years of the Green Deal, the oversight body will need to be highly visible, nimble in its actions to address breaches of the code of practice, and delivering brutal penalties to transgressors. Only by doing so can we hope to prevent a race to the bottom in the standard of Green Deal provision.
Andrew Warren is director of the Association of the Conservation of Energy