Financial Protection Consultation
MCS Consultation – Proposed changes to MCS requirements for financial protection products
MCS has published a four-week consultation on proposed changes to its requirements for financial protection in the small-scale renewable sector.
MCS invites comments from financial protection providers, installers and consumer groups. The consultation closes at 10.00am on Monday 19 May 2025. Please send all completed consultation feedback forms to consultations@mcscertified.com.
THE REQUIREMENT AND IMPORTANCE OF APPROPRIATE FINANCIAL PROTECTION
Under the redeveloped scheme, our Installer Operating Requirements state that an Installer must provide an approved financial protection product to their customer. Approved financial protection products will be those in compliance with ‘MCS Requirements for Appropriate Financial Protection’; the subject of this consultation.
These requirements are intended for reference by financial protection providers who wish to secure MCS approval for their products and, as such, offer financial protections to the UK’s low carbon technology sector via MCS certified Installers. Once approved, protection products will be listed on the MCS website for selection by Installers.
In response to feedback from this consultation, MCS will publish an updated version of the draft “Requirements for Appropriate Financial Protection”.
In summary, the requirements are:
- extend the definition of “cease to trade” beyond legal insolvency to include bankruptcy, receivership, retirement, striking off, sale of assets, etc,
- afford protection if an installer refuses or fails to deliver the remediation determined necessary as an outcome of the MCS complaints management process and if applicable, subsequent ADR,
- incorporate failures in design,
- extend the period of cover for an installation to 6 years compared to the current 2 year minimum mandated today under IBGs, and
- offer protection that a consumer can rely on that is independent of any other financial protections that a consumer may or may not have access to.
Consultation background
CONSUMER PROTECTION REPORT
In December 2022, MCS published the Consumer Protection in Small-scale Renewables report. Informed by independent research and drawing on assessments made by leading consumer protection organisations such as Citizens Advice, it presented clear evidence that consumer protection in the sector is falling short. In relation to Insurance Backed Guarantees (IBGs), the report found that IBGs were not, in their current form, providing suitable financial protection for consumers.
SCHEME REDEVELOPMENT FINDINGS
In our subsequent 2023 consultation on proposed changes to MCS, we shared a proposal for the implementation of improved financial protection. Distinct from the other planned changes to MCS, we had proposed that through partners, and with a working title of the “MCS Guarantee”, an MCS certified installer would be able to offer more effective financial protection products to their customers and as such improve consumer protection and increase consumer confidence.
We had determined that financial protection products should better meet the expectations consumers have of a guarantee “that can pay for the cost of remediation of a customer’s installation, if a contractor is unable or unwilling to complete the remediation work deemed necessary to resolve an installation’s workmanship or performance issues”.
The Competitions and Markets Authority (CMA)
In May 2023, the Competition & Markets Authority (CMA) published its “Good practice principles for standards bodies – Raising standards in the green heating and insulation sector”. The CMA’s principle 5 refers to the provision of “strong financial protections”.
In response to our consultation on scheme redevelopment, the CMA stated that they “would, in principle, welcome added [financial] protections for consumers compared to what MCS’s current scheme provides” as follows:
- “Remediation and not compensation (so installation problems get put right directly)”
- “An extended term period for the protection (not less than 6 years), which would be consistent with the current requirements under Competent Person Schemes)”
- “Wider coverage than just where the contractor ceases to trade, including situations where the contractor cannot or will not fix the problem”; and
- “Funding remediation where the physical fault is caused by defects in an installation design (in addition to workmanship) or where installations are not performing in line with their promised system performance as designed. “