Zurich was an original signatory to the industry’s proposal to form an industry code to deal with the issues raised in the market study report.
As agreed between the OFT and the industry, the proposal for the homebuilding code envisaged that the code would have provided the ‘established means’ for the control of unfair commercial practice under the Consumer Protection from Unfair Trading Regulations 2008 and the Business Protection from Misleading Marketing Regulations 2008 within the homebuilding industry. View information on established means.
In response to the withdrawal of Zurich from the code body, the OFT has expressed concern about allowing the remaining signatories to form a code which became the established means of enforcing aspects of consumer law in the homebuilding industry. This concern arose from the fact that the OFT would have to treat certain operators within the industry differently. In the OFT’s view, this was not an appropriate use of the ‘established means’ status and could appear to accord certain operators within the industry preferential treatment from the OFT.
Following further consideration of the situation, the OFT believes that, without Zurich’s participation, the form of code as originally envisaged in the market study is no longer achievable. The OFT has informed the industry of its view.
It is the case, however, that the industry has made significant progress towards developing a voluntary code. The industry has informed the OFT that it remains committed to introducing a form of voluntary code in the near future.
The industry is currently considering whether to make an application for its code under the OFT’s Consumer Codes Approval Scheme (CCAS) or whether its code will operate without OFT approval. The OFT has informed the industry that some aspects of its proposed code may not meet the OFT’s CCAS criteria, for instance, the OFT considers that the currently proposed limit on the redress scheme is too low.
The OFT understands that the industry’s aim in developing its code is to meet the OFT’s concerns as set out in its market study report, entitled Homebuilding in the UK. However, the OFT firmly believes that it is also essential for the code to be evaluated against a recognised benchmark to ensure its effectiveness. If the industry decides not to apply for approval of it code under the CCAS criteria, the OFT is concerned that there would then be no recognised benchmark by which to measure the effectiveness of the industry’s code going forward.
We understand the industry will make a decision whether or not to apply for OFT approval by the end of June 2009 – between now and the end of June it will assess whether or not it can make the changes to meet the requirements of CCAS. The OFT will publish a further update on this page at around that time.
NHBC Consumer Code