The Green Deal must not be a licence to mis-sell
The government’s flagship energy policy – the Green Deal – has been in the news a lot lately. Today we’re telling them that the Deal needs to change to stand a chance of appealing to consumers. Will they rescue it?
Plans for the Green Deal are still in development so there’s still time – just – for the government to change it for the better. That’s why we’ve issued the Energy Secretary, Ed Davey, with five challenges. If the government wants the Green Deal to be a good deal for you and I, then these changes are essential.
How much will people really save?
1. It’s vital that savings estimates are accurate. The way the Green Deal works is based on a ‘Golden Rule’ designed to ensure (as far as possible) that the savings you make from installing energy efficiency measures exceed the monthly repayments.
But the current plan is that a Green Deal company can give you a loan based on average figures about your home. This will assume things like how many people live in your property, but it won’t take into account your actual energy use – although you will receive a separate personalised assessment.
Why does this matter? Well, this could lead to people being mis-sold Green Deals on the basis of higher savings estimates than they can actually get. A much more detailed assessment of your circumstances and energy use is needed.
2. We’re worried about fees for repaying your Green Deal loan early. The Consumer Credit Act is being amended to allow Green Deal lenders to penalise early repayment with hefty fees – that’s just not right.
Ban unwanted sales tactics
3. The Green Deal shouldn’t become a licence for companies to cross-sell all kinds of products consumers don’t want or need.
If a Green Deal advisor is in your home he or she should stick to advising you about energy efficiency measures. The government’s been open about the Green Deal opening doors to companies wanting to sell further home improvement measures, but unless express prior consent has been given we think selling goods on credit during the Green Deal process should be banned.
Make sure it’s value for money
Alongside the Green Deal the government will launch the Energy Company Obligation which we’ll all pay for through a levy on our energy bills. This will subsidise energy efficiency measures – in a similar way to the current CERT scheme, where energy companies install free or subsidised loft and cavity wall insulation.
4. We’re concerned that the ECO is designed in such a way that it won’t do enough to tackle fuel poverty. Bearing in mind that this comes out of our bills, it’s also worrying that the government is focusing the funding on high cost measures like solid wall insulation – that will only reach a small number of households – rather than low-cost, high-impact measures like loft insulation – which still hasn’t been rolled out to everyone who needs it.
5. Our final concern is about the way Green Deal quotes will be communicated. They all need to be in a standard format so that people can compare one quote with another, and consider whether other sources of finance might be more appropriate. A jumble of multiple formats presents a real risk that people will be bamboozled by a completely new and complicated financial product.
Energy efficiency is really important. Without it too many of us will continue to pay over the odds for our gas and electricity. It’s great the government wants to tackle this but, as it stands, the Green Deal doesn’t look like a good deal for consumers. And they’ve got to get it right.
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