Construction quality of new-build homes is a growing concern. Here CM asks Sue Redding of the Chartered Trading Standards Institute how consumers are protected by the Approved Code Scheme.
What is the Approved Code Scheme?
The Approved Code Scheme helps businesses to protect consumers with best practices. Originally set up by the Office of Fair Trading (OFT), the scheme is supported by the government and powered by Trading Standards, the local authority departments that enforce consumer protection legislation. The scheme’s independence and association with Trading Standards is fundamental to its credibility.
The scheme is overseen by the Consumer Codes Approval Board (CCAB), to ensure independence from businesses and to protect consumers’ interests. The CCAB is set up as a community interest company (CIC) and the Chartered Trading Standards Institute (CTSI) delivers administrative services on behalf of the CCAB.
Approved Code Scheme businesses are on the front line of the ongoing fight against rogue traders and other bad practices, helping the Trading Standards profession to protect consumers. The scheme aims to drive up standards and reduce consumer detriment in self-regulated sectors and encourage business to have a positive impact on consumers in their sector.
Overall, the Approved Code Scheme currently has 18 code sponsors with 21 different approved codes in a wide range of sectors which involve higher potential risks to consumers and larger consumer purchases and covers more than 80,000 businesses in the UK.
Who are the Approved Code Scheme sponsors in the new homes sector?
In the new homes construction and warranties sector, there are three major code sponsors, Consumer Code for New Homes (CCNH), Consumer Code for Home Builders (CCHB) and ICW Insurance Services, which operate consumer codes under the Approved Code Scheme and provide high levels of consumer protection, going above and beyond consumer law obligations.
Warranty providers under the Approved Code Scheme include Advantage Home Construction Insurance (AHCI) and Ark Insurance Group. Over 10,000 new homebuilders are registered with the three major codes sponsors and more organisations are currently seeking code approval.
How does the scheme protect buyers of new homes?
The Approved Codes set out mandatory requirements that apply to all developers registered with the codes, to ensure that best practice is followed in the marketing and selling of new homes.
Approved Codes in the new homes sector cover the pre-contract stage, contract exchange, legal completion and after-sales service. Their key protections include:
- providing clear, detailed information to enable consumers to make informed decisions throughout the buying process with additional support for vulnerable consumers;
- pre-completion inspections with a professional adviser to tackle snagging issues;
- a 10-year warranty, with a builder required to deal with any defects in the first two years;
- the ability for buyers to cancel the agreement after exchange if substantial changes are made to their home that they don’t agree with;
- financial protection such as a full refund of the reservation fee within a 14-day cooling-off period and deposit protection against a builder going into liquidation; and
- a free and accessible complaints and redress process with access to an alternative dispute resolution (ADR) scheme.
Our three major code sponsors provide ADR through the Centre for Effective Dispute Resolution (CEDR).
The CTSI is the competent authority which audits and approves ADR bodies in all non-regulated sectors under the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015.
How can consumers identify an Approved Code under the scheme?
Once approved, member businesses can then display the scheme’s Approved Code logo so that consumers can identify businesses that have consumers and customer service at the heart of their offering to inspire confidence and reassure consumers. Consumers should look for the Approved Code Scheme logo, which we have recently refreshed.
How are Approved Codes monitored?
The process for approving codes under the scheme is very detailed and robust. Code sponsors will only be approved if they can clearly demonstrate that they are
committed to the reduction of consumer detriment and improving service standards.
Any code of practice approved under the scheme requires all member businesses to comply with the code sponsors’ code of practice, supporting business compliance.
Once approved by the CCAB, each code sponsor undergoes rigorous annual audits to ensure continuing compliance. More detail about the Consumer Codes Approval Scheme is on our website.
How effective are Approved Codes in protecting consumers?
Approved Codes are an important part of the consumer protection landscape as they offer alternatives to enforcement.
Unlike legislation, which can be slow and cumbersome to amend, codes of practice under the scheme can quickly adapt to changing market practices which means consumers are continually protected. They also reduce reliance on costly and resource-intensive legal or judicial routes to achieving redress.
We estimate that the scheme covers consumer spending of around £155bn and in the past year it has helped to recover more than £2.2m for consumers.
Further information about the Chartered Trading Standards Institute is available at
www.tradingstandards.uk.
Email: [email protected] or [email protected].
