Consultation on Scotland's Energy Efficiency Programme

An unintended legacy of the Green Deal, is the continued false or misleading marketing claims by rogue traders in the energy efficiency sector claiming government grants or other financial incentives are available for the products they are selling. The companies responsible for these claims in most cases were never Green Deal approved but nonetheless they associate their products/services with Government energy efficiency schemes.

With the launch of SEEP, this practice is likely to continue and potentially become more prolific. If this is the case, it will undermine legitimate SEEP approved businesses, and consumer trust in the SEEP brand and the energy efficiency industry more broadly. It also has the potential to undermine the role of HES and RES as the first point of contact on the energy efficiency market.

Although not unique to Scotland, the issue of false/misleading marketing in relation to energy efficiency products is more prolific here than in the rest of the UK. In recognition of this, Trading Standards Scotland (TSS) has designated the issue a national priority meaning resources are being prioritised to tackle it. False/misleading marketing is an offence under the Consumer Protection Regulations 2008 and TSS uses this and other legislation to address the misleading practice.

A key enabler for misleading marketing claims in relation to energy efficiency products is unsolicited marketing calls. These calls are also more prolific in Scotland and can typically amount to millions in a few weeks. TSS is working in partnership with the Information Commissioners Office to take action against perpetrators.

TSS participated in the Scottish Government's Nuisance Calls Commission which took place at the end of 2016/beginning of 2017. Although the Commission focussed on all forms of nuisance calls, its action plan (due to be published in September) should assist in protecting people especially the most vulnerable from nuisance calls including those made in relation to energy efficiency home improvements.

The above highlights the enforcement and preventative action that is being taken to reduce misinformation on energy efficiency schemes, but a proactive multi agency approach to tackle the issue is recommended in advance of the launch of SEEP.

Trading Standards Scotland would welcome the opportunity to work with SEEP and the Consumer, Competition and Regulatory Policy Unit of Scottish Government to devise a consumer awareness campaign warning consumers to be circumspect about unsolicited calls in relation to energy efficiency products and signposting them to RES and HES.

Whilst HES and RES may be providing excellent advice to those consumers who are aware and informed enough to know they exist and proactively get in touch, most consumers probably don't know where to turn. And they are therefore more susceptible to the false/misleading mass marketing of the rogue traders in the energy efficiency home improvement sector. So there needs to be a robust awareness raising campaign particularly aimed at more vulnerable consumers to protect them from misinformation and signpost them to legitimate advice provision.

TSS has concerns that the smart meter roll out has the potential to result in similar levels of consumer detriment as the Green Deal.

It is proposed in the Each Home Counts Review that the roll out of smart meters is used as an opportunity for marketing other energy efficiency measures. Whilst this would be an ideal hook with which to engage consumers on energy efficiency products, it also places the smart meter provider in an extremely powerful position; one in which the consumer could easily be misled and exploited by unscrupulous businesses. If SEEP were to adopt the smart meter roll out as part of its programme, it could ensure effective monitoring of the process as a check and balance to the power of the smart meter company.TSS would welcome the opportunity to work with SEEP with a view to taking swift and timely enforcement action if a smart meter company was found to be misleading consumers.

Serious organised crime groups are increasingly infiltrating consumer related areas of business. The Green Deal was particularly attractive to them as there was a low level of consumer knowledge about the products or how the Green Deal financing scheme worked so it was easier to perpetrate fraud. In addition the Green Deal framework did not empower consumers to complain and was not effectively policed meaning that trading malpractice was not identified and dealt with.

If SEEP is to become a trusted brand and a sustainable Scottish supply chain for energy efficiency services is to be created, SG must ensure that criminals are prevented from infiltrating the scheme.

For any business wishing to become SEEP approved installers, there should be a rigorous vetting procedure which involves checks against Trading Standards and Police intelligence systems. Police Scotland and local authority licensing boards are utilising a system of Intelligence Assessment Disclosures which enables licensing boards to consider intelligence held by the Police on individuals before granting them a licence. This is particularly useful as often those involved in or associated with organised crime will not have previous convictions however and the system allows those considering licensing applications to have a more holistic picture of the applicant.

Once approved there must be robust monitoring of installer's customer service. If an installation business generates a high number of customer complaints, swift action should be taken to investigate it and if necessary, suspend/remove it from the SEEP programme. Equally important is some form of insurance for consumers so that they have peace of mind that they will not be left out of pocket if a business has misled them or installed to product without reasonable skill or care.

In the Green Deal, consumers were not clear where to go if they had a complaint. The SEEP programme must make the complaints mechanism visible to consumers and easy to access. TSS and the SG Consumer, Competition and Regulatory Policy Unit have been involved in discussions with Resolver, which runs an online tool for consumers to raise and resolve complaints. The aim of the talks is to obtain access to complaints data from Resolver. Assuming this is agreed, SEEP could require SEEP approved installers to signpost consumers to Resolver if they have a complaint. That way consumer advice and enforcement organisations would be able to monitor the trading practices of SEEP installers and timely interventions could be initiated.

There isn't a tried and tested form of redress which SEEP could adopt; but it can learn lessons from the Green Deal redress framework which proved not to be effective and wasn't consumer friendly.

Many consumers were extremely vulnerable and possessed little or no knowledge of the Green Deal or the benefits of various energy efficiency measures. In the worst cases these consumers were victims of approved installers who actively set out to con them and con the system. The consumer redress system was not intended to deal with trading practices of this kind.

Often consumers didn't realise they had been conned until they received their first energy bill and discovered their 'free' solar panels were not in fact free. By which time, the installer had received payment from the finance company and was therefore even less disposed to offer redress.

Consumers experiencing detriment didn't know where to turn and neither did Government funded organisations involved in promoting the Green Deal who 'sat' on complaints.

If consumers did raise a complaint with the Ombudsman, a paperwork investigation was carried out. Generally, if the paperwork was in place and the business vociferously denied wrongdoing or making false or misleading verbal claims, complaints were not upheld. No cognisance was taken of the volume or severity of complaints in relation to certain businesses. Had there been effective governance of the redress system, this would have been picked up.

On occasions where the Green Deal Ombudsman was of the opinion that there was no case to answer in respect of its remit , it would suggest consumers contact the Financial Ombudsman. Again, if the paperwork appeared to be correct, the complaint would not be upheld. At least initially, there appeared to be a lack of communication between the two Ombudsmen services which if it had taken place, would have more quickly identified problem businesses. Again this suggests better overall governance was required.

Many Green Deal consumers were elderly and/or vulnerable and yet they faced a maze of bureaucracy, letter writing and form filling in an attempt to seek redress. There was no consumer advocacy function built in to the redress scheme. Whilst Resolver is not an advocacy body, it does make it easier for consumers to complain. And it enables an oversight of the system which could identify patterns of consumer detriment or persistent poor customer service.

A primary focus of SEEP is to help those in fuel poverty, which means its consumers will be particularly vulnerable if they suffer financial detriment as a result of agreeing to the installation of energy saving devices. Therefore it is imperative that the redress system is centred on their needs.

In summary, the redress system must be widely publicised, it must be easy to access and use, vulnerable consumers must have access to advocacy services and the alternative dispute resolution service must be effectively governed to ensure that problem traders are being identified.

The Each Home Counts Review appears to be a good basis for developing a consumer protection framework and encouraging good business practice. The Quality Mark proposal is also a welcomed initiative and it makes sense for this to be adopted in Scotland so as not to confuse consumers.

But as previously mentioned, the energy efficiency market will continue to be attractive to criminals and the threat of robust enforcement is necessary to deter those who have no intention of trading fairly and merely seek to exploit vulnerable consumers using the framework of a government initiative to legitimise themselves.

It is therefore recommended that SEEP and Trading Standards establish a good working relationship to protect the reputation of the scheme and ensure that it becomes a mechanism for Scotland to grow a reputable, sustainable energy efficiency installation industry that works for consumers and in so doing, meets the energy efficiency goals set by Scottish Government.