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£700m insulation market needs to open up, says OFT

2 Aug 12 A small number of manufacturers have too tight a grip on the home insulation market, the Office of Fair Trading has concluded.

The OFT heard that there was a relatively high degree of market concentration among insulation manufacturers, which is one of the precursors for anti-competitive behaviour, it said.

Investigators also heard criticism that the British Board of Agrément (BBA) was slow to approve any new insulation products and was told that “the lack of competition in the market for certifying new products may be acting as a constraint on entry and innovation”.

The BBA replied that it was “working to improve efficiency”.

The OFT launched a call for evidence into the home insulation market in April 2012, triggered by the high level of consumer complaints about home insulation, and concerns that competition in the market may not be working well. Yesterday it published its findings.

During its evidence gathering, the OFT received complaints that some traders are not always installing the most suitable form of insulation, for example, by using inappropriate materials in houses that are susceptible to damp. It also found that people can find it difficult to obtain quick and effective redress when things go wrong.

The OFT has recommended that the government should ensure a single body has clear responsibility for longer-term monitoring of the quality of installations carried out under the ECO and Green Deal initiatives, and has also proposed changes to improve redress schemes.

To lower the barriers for manufacturers trying to develop innovative new products and encourage greater competition and choice in the market, the OFT has recommended that product certification bodies improve their certification processes. It is also encouraging architects, building control officers and other building project commissioners to be more open to specifying products from more than one UK product certification body.

As part of a wider energy efficiency project looking at products like double glazing, solar panels and boilers as well as insulation, the OFT has also reviewed almost 4,000 contacts made by consumers to Consumer Direct in 2011 and 2012. This has highlighted a number of recurring issues including the possible use of confusing and defective paperwork, potentially aggressive and misleading sales techniques and concerns over the quality of products and services. The OFT continues to actively examine issues that may be causing consumer detriment in this sector and will look to address these, including through potential enforcement action where appropriate, working with local authority trading standards services and others.

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OFT director of services, infrastructure and public markets Nisha Arora said: “The home insulation sector is now worth some £700m and it is important that people receive good quality, well-installed insulation that makes their homes more energy efficient.

“We hope that the recommendations in this report and our continuing work in this sector will encourage greater competition and choice and give consumers increased confidence to have insulation installed.”

Energy minister Greg Barker said that the Green Deal would solve all the issues identified by the OFT and make everything better.

“I welcome this report from the OFT, which highlights a number of important issues with the home insulation market. It shows that people are not always being well served by the current setup. That is why consumers are at the very heart of the Green Deal, which will enable people to save energy and money,” said Mr Baker.

He added: “I am pleased that the OFT recognises the efforts we are putting into the Green Deal to ensure it delivers the best deal for consumers, and I look forward to working with them to see how we can make it even better.”

Consumer protections embedded in the Green Deal include:

  • A Green Deal quality mark that all Green Deal installers, providers and advisers will have to display to demonstrate compliance with required standards
  • A Green Deal Oversight Body will carry out spot checks on Green Deal participants to ensure compliance to the standards. It will have the power to recommend if a company should be stripped of its Green Deal seal of approval

The full OFT report is available to read here.

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