Changes in financial protection within the glazing industry – as published in GGP Mag
Following news of a glazing industry fund closing to new deposit registrations during the COVID-19 crisis, I wanted to bring some clarity for installers who suddenly find themselves outside the rules of the competency schemes through no fault of their own.
For any installer who has registered work through a competency scheme, the need to give financial protection and indemnify a deposit is an add-on to every job that we are all used to. The value of this has always been useful to consumers as they have received defect cover of an installation for 10 years even if the installer is no longer trading.
The cost of such cover has been dependent on the cover offered but is often around £20 per job notified for most standard installation jobs involving windows and doors. The driver for this regulation surrounding the schemes was to protect the housing stock in the UK from defects especially for non-compliance with the building regulations.
The need for insurance cover has been since day one of competency schemes with the general rule by glazing schemes being that you must also provide deposit protection. However, this additional element concerning deposit cover is more of a best practice position and is not imposed by the rules governing competent person schemes.
The largest installers in the market were party to a collective fund and it was deemed appropriate historically that this be made the case for all others. This gave a pricing advantage regarding IBGs for the larger installer members of the collective fund.
The extremely swift withdrawal of one fund has shifted the position for installing businesses who paid into this as they have now lost an advantage they marketed, arguably at the most vital of times to consumers. Although given the amount of deposits taken by national businesses, it is possible to imagine that the collapse of any major participant could bankrupt the fund pot and put all fund participants at considerable financial risk.
Such models are only effective if they perform at times of greatest pressure. To only operate when the going is good financially, offers a false sense of security for industry and consumers alike.
Indeed, rapid withdrawal of such a fund means that participants are immediately placed outside the rules of the competency schemes as deposits are unexpectedly unprotected. Suddenly local tradesmen were abiding by rules that the large installers were no longer meeting.
The rules surrounding this protection are in review and will amend in early 2021, however the current position as explained by government is that it is up to the schemes.
With the loss of such a fund I understand that other insurers reassessed the financial viability of covering deposits and suddenly installers were placed in the risky position of not being able to meet certification body requirements.
Certass has responded by removing deposit cover requirements, as it is unfair to expect installers to abide by a rule that could be impossible to meet, and reduces double standards between local and national businesses.
New mechanisms need to be created for the future and the usual position may be adopted where industry looks for government to make rules that they believe our industry should be leading with. Throughout the COVID-19 pandemic, we have seen associations reposting government updates without any thought, interpretation or common sense applied, which serves nobody. Government expects more from trade associations and that is why at Certass we have been delivering information relevant to our membership with absolute clarity, giving them the confidence to make the right decisions for their businesses.
Some suggest that no deposits should be taken, as supported by some consumer groups. However, at Certass we have been able to demonstrate to some of these influencers that businesses need the ability to charge deposits to cover materials. The reverse argument is that we are using such deposits as cashflow and consumers could be left in difficult positions, but this argument can be countered by the ‘rogue consumer’ whose actions can destroy a local business without any easy recourse.
So, we are left in a position that is not ideal, with deposits needing to be taken and best practice being that they are covered. The easiest method is to ensure the consumers pay on credit card as the banking system then assumes protection, whilst industry and government works out where we go in 2021.
For those in Certass, I would suggest using the contract templates available, produced in 2019 and updated in 2020. These will protect installers against consumers trying to withhold large sums of money for minor issues and are updated to account for guidance since COVID-19.