Competition body is ‘no longer part of equation’ because of £15,000 cap on dispute resolution

The Office of Fair Trading has withdrawn support for a proposed code of conduct for housebuilders, due to be launched next week.

The industry, through a coalition of trade bodies and warranty providers including the NHBC, committed to introducing a code of conduct after the competition body said in 2008 that new homebuyers needed more protection. It would oblige housebuilders to divulge greater information to consumers and set up a dispute resolution body for complaints.

But the OFT is now thought to have removed its endorsement of the scheme because the dispute resolution service would only deal with complaints worth less than £15,000. It had wanted a cap of £150,000.

Rod MacEachrane, former NHBC commercial director and chair of the management board for the Consumer Code for Housebuilders, confirmed that the OFT was “no longer part of the equation”. He said: “It said we were not meeting our commitments under the market study. We profoundly disagree, but are now dealing directly with the business and enterprise and the communities departments.”

The oft said we were not meeting our commitments. We profoundly disagree

Rod MacEachrane

MacEachrane said a cap of £15,000 would deal with 95% of disputes, and was vital to ensure it remained a low-cost dispute resolution service.

When the OFT published its market study it found there were £174m worth of problems with new homes each year.

An OFT spokesperson confirmed the agency had withdrawn its support for the code. They said: “We told the communities department they should consider introducing statutory redress to housebuilders and they are still considering that as we understand it.”