The heat is on – the CMA investigates consumer practices in the green heating and insulation sector

As consumers seek greener solutions for heating their homes, they are faced with navigating a complex range of products and buying processes. The UK regulator, the Competition and Markets Authority ("CMA"), is now asking whether businesses are offering their products and services in a clear, fair, honest and transparent manner and one, which is compliant with consumer protection law in the UK.

On 27 September 2022, the CMA announced that it is putting the green heating and insulation sector under scrutiny by launching a call for information from consumers and businesses.

WHAT ARE GREEN HEATING AND INSULATION PRODUCTS?

The CMA is focusing on the sale and marketing of the following products to consumers:

• heat pumps;
• home solar systems;
• home insulation (including wall, loft and spray foam);
• biomass boilers (that use renewable sources, such as wood pellets); and
• hydrogen-ready boilers (i.e. that use natural gas when installed, but are designed to be converted to 100% hydrogen).

CONSUMER PROTECTION

The rise in energy costs and consumer appetite for greener solutions to help stem the climate change crisis is driving consumers to use greener home heating and insulation solutions. This in turn is creating a prime market for companies who are marketing and selling such products. According to the CMA's findings, home heating alone represents around 17% of the UK's carbon emissions. Therefore, the need for more sustainable and environmentally friendly home heating and insulation solutions will need to evolve rapidly to support the UK's aim hit net zero by 2050.

The CMA is seeking to understand whether such companies are acting in compliance with their consumer protection obligations or if consumers are being faced with misleading advertising and aggressive or unfair commercial practices when purchasing such products. For example:

• exaggerated claims about the performance of products; sustainability and cost savings;
• greenwashing;
• exploitation of a consumer's limited understanding of the products;
• exploitation of a consumer's eagerness to be more environmentally friendly; and
• complex and confusing buying processes.

The primary aims of the call for information will be to:

• identify poor commercial practices, which adversely affect consumers;
• assess whether consumers are being treated fairly;
• identify whether the CMA needs to take steps to better protect consumers; and
• support businesses to ensure compliance with consumer protection law.

THE CALL FOR INFORMATION

The CMA is seeking information from the following:

Consumers

Information about consumers' experiences of purchasing green heating and/or insulation products in the last 2 years. For example:

• What information and funding schemes are available to consumers when making purchasing decisions?
• How do consumers access and use such information and is it transparent, accurate and up to date?

Businesses

Information from businesses that sell, lease and/or install green heating and/or insulation in consumers' homes. For example:

• How do businesses describe their products and services?
• Are they making misleading claims?
• Are consumer contracts clear and easily understandable and when are they brought to the attention of consumers?
• Are complaints procedures clear and accessible to consumers?

Other Interested Parties

Information from other interested parties, such as bodies/associations, government bodies and regulators, consumer representative bodies, charities, consumer enforcement bodies, think tanks, and academics.

Consumers, businesses and stakeholders have until 1 November 2022 to share their experiences and views, by submitting their responses via the CMA website.

PROPOSED ACTIONS

Following the conclusion of the consultation, the CMA plans to publish its findings in Spring 2023, which will enable it to determine next steps and actions, which may include guidance for businesses, information and guidance to consumers and advocacy and advice to the Government to protect consumers. If the CMA's finding highlight any breaches of consumer law, then the CMA will also have the option to take enforcement action against businesses.

HOW DOES THIS AFFECT YOU?

If you are in the business of marketing, selling and/or leasing green heating or insulation products, you should consider the following:

1. Do you have examples of good commercial and advertising practices that you want to share with the CMA?
2. Are your consumer terms and contractual processes clear, fair and easy for consumers to navigate?
3. Are your marketing communications clear, fair, honest and transparent?
4. Is there a risk that some of your claims could be viewed as "greenwashing"?
5. Do you hold evidence in support of your propositions?

HOW WE CAN HELP YOU

We can help you to assess your position by reviewing, advising on and revising (where needed) your consumer terms, marketing strategies, claims, content and supporting evidence and guiding you towards compliance with consumer law requirements.

This article was authored by Sonal Patel Oliva from our Advertising & Consumer Protection group. If you have any queries or would like any further assistance about advertising and consumer law matters, please do not hesitate to get in touch with Sonal or another member of our Advertising & Consumer Protection group.