What is self-regulation and how does it help consumers?

In conversation with the Chartered Trading Standards Institute (CTSI)

Consumer codes developed under the CTSI Approved Code Scheme, such as the Consumer Code for Home Builders (the Code), play an essential role in self-regulated industries. They voluntarily set standards in areas such as customer service rather than relying on laws or regulations set by government. This can lead to fears that these standards are optional and that they may lack ‘teeth’ when it comes to tackling consumer detriment, but often that is not the case at all. For example, complying with the Code is mandatory for those builders operating under the main warranty bodies (unless they have opted to join an alternative code scheme), and the effectiveness of the Code itself is robustly audited each year as part of its membership of the Approved Code Scheme.

We caught up with Sue Redding, Policy & Campaigns Consultant at the Chartered Trading Standards Institute (CTSI) for an insight on how self-regulation works and the processes in place to strengthen protection for consumers.

How do codes of practice support consumers?

Consumer Codes facilitate robust self-regulation to promote consumer interests and raise standards through the principles of effective customer service and protection, setting common standards that go above and beyond consumer law obligations. They are an important part of the consumer protection landscape as they offer alternatives to enforcement, reducing reliance on costly and resource-intensive legal or judicial routes to achieving redress.

According to a report from the Ministry of Justice, the average time for small claims to be heard is 51.6 weeks[1]. By contrast, the statutory timeframe for resolving alternative dispute resolution is 90 days, and in many cases, the process is free to access for consumers.

Codes therefore help consumers understand what they can expect from the business they are buying from, and feel confident that speedy, cost-effective help is available should they need to raise a claim.

How is self-regulation monitored – can we be sure these schemes offer good protection for consumers?

It’s fair to say that not all codes of practice are created equal – although consumers are likely to have a better experience with companies that commit to a code as it does show a focus on customer service.

However, the government recognised the importance of independent scrutiny of codes some years ago. The then Office of Fair Trading (OFT) set up what is now called the Approved Code Scheme. The scheme continues to be backed by government, and supported by the Chartered Trading Standards Institute. The scheme is overseen by the Consumer Codes Approval Board (CCAB), a community interest company, to ensure independence from businesses and to protect consumers’ interests.

The key aims of the Approved Code Scheme are to reduce consumer detriment in self-regulated sectors, drive up standards, and act in the interests of the community. It engages with business to encourage them to have a positive impact on consumers in their sector, focusing on sectors which involve higher potential risks to consumers and larger consumer purchases.

The scheme currently has 18 Code Sponsors with 21 different codes, covering more than 45,000 businesses in the UK. There are Code Sponsors in the green energy, motor vehicles, housing and homebuilding sectors, as well as many other industries. A full list of Approved Codes can be found on the scheme’s website https://approvedcode.tradingstandards.uk/our-codes-of-practice/

What impact do the Approved Codes have on consumers?

Approved Code Scheme businesses are on the front line of the ongoing fight against rogue traders and other bad practices, thereby helping the Trading Standards profession to protect consumers.

The Approved Code Scheme’s association with Trading Standards is a fundamental element of its credibility. In the past year we estimate that the scheme has helped to recover more than £2.2m for consumers and covered consumer spending of around £155bn.

What is the approval process for Code sponsors?

The core criteria of the Approved Code Scheme include requirements that go above and beyond consumer protection legislation. 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.

Code approval is robust and rigorous, involving a three-part application which consists of Expression of Interest (EOI), Stage 1 and Stage 2, and can take at least a year to complete.

The Scheme’s core criteria include:

• requiring compliance with relevant codes or legislation
• not engaging in undesirable trade practices or misleading advertising
• respecting the sanctity of a consumer’s home by not making unsolicited visits or using high-pressure sales techniques
• ensuring fair and transparent terms and conditions, and clear cancellation rights; protection of customers’ deposits
• flexibility on delivery dates and the provision of additional help for vulnerable consumers.

All Code sponsors are required to signpost to an Alternative Dispute Resolution (ADR) body. CTSI is a Competent Authority for approving ADR bodies. Nine out of 18 organisations that belong to the Approved Code Scheme are also independently ADR-approved by CTSI. 

Once approved by the CCAB, each Code Sponsor is audited on an annual basis to ensure continuing compliance. See more information here: Consumer Codes Approval Scheme (tradingstandards.uk).

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 trustworthy businesses that have consumers and customer service at the heart of their offering to inspire confidence and reassure consumers. We have recently refreshed the scheme logo.

Existing scheme logo                                                    Refreshed scheme logo

What advice would you give to consumers who are about to make a major or complex purchase?

Look for the Approved Code logo and ask the business you are buying from whether they adhere to a code of practice. Read any terms you are expected to sign and ask about policies on returning goods or resolving complaints.

Don’t be afraid to ask about timeframes and how they will communicate with you if it’s a lengthy purchase process. And find out whether they are part of an ADR or ombudsman scheme which will give you added protection.

Checking reviews can provide useful insights, although there are instances where reviews are fake or incentivised so combine this with your own research.

Where you see the CTSI Approved Code logo, you can be sure the business has committed to:

• No misleading information
• No unfair and/or high pressure sales techniques
• Clear and fair contracts
• Customer-focused staff
• Easy complaints process

It’s worth noting that not all Approved Code member businesses will be included in the database on the Approved Code website due to the way some industries operate. This is true of the home building industry so if you want to check whether a builder is a member of the Consumer Code for Home Builders – an Approved Code Scheme – contact secretariat@consumercode.co.uk

[1] https://www.gov.uk/government/statistics/civil-justice-statistics-quarterly-january-to-march-2024/civil-justice-statistics-quarterly-january-to-march-2024