Deposits and Staged Payments for Home Energy Work

A deposit on a home energy installation is money paid before any work is done, and its protection depends almost entirely on which consumer code the installer belongs to. Under the Renewable Energy Consumer Code, a deposit should not exceed 25 per cent of the contract value under any circumstances, and 15 per cent is described as reasonable¹. The deposit and any further advance payment taken together cannot exceed 60 per cent of the estimated overall cost¹. HIES, the other approved code, protects deposits and stage payments up to 25 per cent of your contract value, up to a maximum of £5,000².

Those two figures are the practical answer to the question most householders ask. Anything above 25 per cent of the contract value, up to a maximum of £5,000, falls outside HIES deposit and stage payment protection². A household paying a large up-front sum for solar panels, a battery or a heat pump is therefore carrying risk that no code requires the installer to insure.

The protection itself takes two forms: money held in a separate client or third-party account, or an insurance-backed policy that pays for another installer to complete the work. Both exist because an installer can stop trading mid-job, and both depend on the household keeping the paperwork that proves what was paid.

What deposit protection means for a home energy installation

Deposit protection is a contractual arrangement that stands between a household and the loss of money paid for work that has not been done. It matters more in this sector than in most, because installations are expensive, the work is often arranged at a distance or in the home, and the company doing it may be small.

The two consumer codes that cover this ground, RECC and HIES, are both approved under the Chartered Trading Standards Institute's consumer code approval scheme⁶. RECC was formed in 2006 and is sponsored and run by Renewable Energy Assurance Ltd, known as REAL⁶. Its scope covers the selling or leasing of small-scale heat and power generators, whether from renewable or other low carbon sources, to domestic consumers, and its standards extend to marketing, pre-contractual information, quotations, deposits, contracts, guarantees and after-sales service⁶.

That breadth is the point. A deposit is not protected in isolation: it sits inside a contract, and the code governs what that contract must say, what information must be given before it is signed, and what happens afterwards. RECC also dovetails with the MCS certification scheme, so an installer's certification and their code membership are linked rather than separate⁶.

For a household, the practical effect is that deposit protection is a membership benefit, not a legal right. An installer outside both codes has no obligation to hold money separately, to insure it, or to answer to a code administrator. The protection follows the membership, and it stops when the membership does.

The two consumer codes that cover deposits: RECC and HIES

Membership of one of the two approved codes is not optional for installers working under the main government schemes. Official guidance on the Boiler Upgrade Scheme states that installers must continue to hold membership with one of the two approved consumer codes, RECC or HIES, to be able to deliver work under the scheme⁷. The same guidance confirms that installers who have not transitioned to the redeveloped MCS installer scheme must still hold consumer code membership with one of the other two approved codes of practice, HIES and RECC⁸.

The link runs through MCS certification itself. Ofgem guidance records that a condition of MCS certification is membership of HIES or RECC, and that property owner rights under the Boiler Upgrade Scheme are protected by these consumer codes, certified by the Chartered Trading Standards Institute⁹. The same requirement appears in the feed-in tariff context: before registering, an investor must be a member of the Renewable Energy Consumer Code or the Home Insulation and Energy Systems Quality Assured Contractors Scheme, both CTSI approved consumer protection codes¹⁰.

So the two codes are not competing voluntary labels. They are the consumer protection layer that sits underneath the technical certification, and for scheme-funded work they are a condition of the installer being able to do the job at all.

Deposit limits: how much an installer can ask for up front

The RECC rules set two separate ceilings, and both matter. The first is the deposit itself: it should not exceed 25 per cent of the contract value under any circumstances, and the code gives 15 per cent as an example of a reasonable figure¹. The second is the combined total: under no circumstances can the deposit and the further advance payment, taken together, exceed 60 per cent of the estimated overall costs¹.

The gap between those two numbers is where staged payments live. A household might pay 15 per cent on signing, a further sum when materials are delivered, and the balance on completion, provided the running total stays under 60 per cent until the work is finished. The 60 per cent ceiling is a limit on money held before completion, not a target to reach.

HIES approaches the same problem from the protection side rather than the permission side. Its deposit and stage payment protection covers up to 25 per cent of your contract value, and the exclusion bites on any payments above 25 per cent of the contract value, up to a maximum of £5,000, made before completion of the installation². In other words, the policy is designed around the same 25 per cent threshold that RECC uses as a deposit ceiling.

For a household, the two figures to hold in mind are therefore 25 per cent and 60 per cent. A request for half the contract value up front is above the RECC deposit ceiling and, if it exceeds 25 per cent of contract value, above the HIES protection limit as well.

How members must protect advance payments: third-party accounts and insurance-backed schemes

The RECC rules require two distinct things of members, and they are worth separating because they protect against different failures.

First, funds held in advance must be kept in a client or third-party account or protected payment scheme, separate from the accounts linked to the code member's own credit and banking facilities¹. This is a segregation rule. If the installer's business account is frozen or emptied, money in a separate client account is not part of the installer's general assets in the same way.

Second, code members must arrange for all deposits and any further advance payments to be insured, such that if they become insolvent or cease to trade, the contract can be completed at no additional cost by another code member¹. This is a completion rule. It does not return the money; it pays for someone else to finish the job.

The two mechanisms answer different questions. Segregation asks whether the money still exists. Insurance asks whether the work still gets done. A household facing a failed installer wants both, and the code requires members to provide both.

Outside the energy codes, similar arrangements exist in other trades. Some CPA-registered tradespeople have access to a deposit protection scheme, which ensures the money is protected in the unlikely event that the installer ceases to trade¹². The principle is the same: a third party holds or insures the money so that the household is not simply an unsecured creditor.

MCS approved financial protection products: at least six years' cover with a £250 capped excess

A separate layer of protection sits alongside the consumer codes. MCS approved financial protection products are now available, and can also be purchased by installers still operating under the current scheme, where their use is compliant³. These products are backed by adequate financial reserves and independently audited³.

The cover terms are specific. They provide at least six years' cover from the moment of installation, and the excess is capped at £250³. The cover responds to a defined set of failures: protection even if the installer goes bankrupt, is retired, refuses to carry out work to remedy an installation issue, or there is a failure in design³. It also covers remediation for issues with the installation when resolution cannot be secured through the original installer, and it offers a simple claims route³.

The purpose is stated plainly: a financial safety net for consumers who are unable to secure a resolution to an installation issue via their original installer, supporting the cost of remediation³. That is a different job from deposit protection. Deposit protection covers money paid before work is done; this covers defects found after it is finished, including where the installer has gone bankrupt or retired.

The six-year floor and the £250 excess cap are the two figures a household should note. A policy with a higher excess or a shorter term does not meet the standard described.

What happens if the installer ceases trading: the insolvency triggers that activate protection

Protection is only useful if it activates, and the RECC rules define insolvency broadly rather than waiting for a formal winding-up order. The phrase "become insolvent or ceased to trade" is deemed to include a member being unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986, or section 268 for individuals¹.

Several other events trigger the same treatment. These include where the code member commences negotiations with all or any class of its creditors with a view to rescheduling any of its debts, or enters a compromise or arrangement with creditors¹. They include where a petition is filed, a notice is given, a resolution is passed, or an order is made for or in connection with the winding up of the code member, being a company¹. They also include where an application is made to court, or an order is made, for the appointment of an administrator, or if a notice of intention to appoint, or the appointment of, an administrator is made over the code member¹.

The breadth matters because company failure is rarely a single clean event. A firm may stop answering the phone, miss a delivery, reschedule its debts and then enter administration weeks later. The triggers are drafted so that protection does not depend on the household waiting for the final stage.

For a household, the practical consequence is that the moment an installer looks financially distressed is the moment to act, not the moment to wait. The documents needed to claim are the contract, all receipts for payments made, and any written guarantees². A household that has kept those from the start is in a position to claim; one that has not may struggle to prove what was paid.

Cancellation rights and when work can start: the 14-day cooling-off period

The right to cancel most distance and off-premises contracts runs for 14 days⁴. That covers contracts agreed away from the installer's premises, which includes the common case of a surveyor or salesperson visiting a home and a contract being signed there. The right does not apply to on-premises contracts, so a contract signed at the installer's own business premises falls outside it⁴.

The interaction between cancellation and starting work is where households get caught. If work begins during the cancellation period at the household's request, the position on cancellation changes, and the start date on the contract therefore matters as much as the deposit figure. A contract that schedules work to begin immediately, before the 14 days have run, is asking the household to give up part of that period.

There is a separate registration deadline that is often confused with the cancellation clock. HIES expects installers to complete registration of the installation within 7 days of contract signing². That is an administrative step by the installer, not a cancellation period, and it produces the paperwork the household needs: a Customer Registration Certificate and a Deposit and Stage Payment Protection Certificate².

The two documents are the evidence that protection exists. A household that has signed a contract and paid a deposit but holds neither certificate has no proof that the installation was registered, and registration is what brings the deposit within the protection policy.

What to check before you pay a deposit

The checks that matter are documentary, and they can all be done before any money moves.

Confirm the installer's code membership and which code it is. Membership of RECC or HIES is a condition of MCS certification and a requirement for scheme-funded work, so the answer should be straightforward⁹. Then confirm the deposit figure against the two ceilings: no more than 25 per cent of contract value as a deposit, and no more than 60 per cent of estimated overall costs for the deposit and any further advance payment combined¹.

Ask how the money will be held. The code requires funds held in advance to be kept in a client or third-party account or protected payment scheme, separate from the installer's own credit and banking facilities¹. Ask for the insurance backing too, since members must arrange for deposits and advance payments to be insured so the contract can be completed at no additional cost by another code member if the member becomes insolvent or ceases to trade¹.

Check the contract names the right company. HIES protection requires that you have a contract with the installer named on your certificate². A contract with a different entity, or with a lead-generation site rather than the installer, breaks that link.

Keep everything. The claim documents are the contract, all receipts for payments made, and any written guarantees², and proof of the payments made to the installer may also be required². A dated file of bank records, invoices and certificates is the difference between a claim that proceeds and one that stalls.

If something goes wrong: dispute resolution and recovering money

The first route is the code's own dispute resolution. RECC is a CTSI-approved consumer code, and the code administrator is assessed against core criteria established by CTSI¹. The code is monitored and updated regularly to reflect appropriate business practice, and the administrator publishes the results of that monitoring in an annual report made available to code members, CTSI and on the website¹. RECC can be contacted on 0207 981 0850⁹.

If the installer has stopped trading, the deposit protection policy responds. HIES guidance states that a household may be eligible for a refund if completion by another installer cannot be arranged, subject to policy terms². The preference is completion by another installer; the refund is the fallback.

Where the failure is a defect rather than a disappearance, other protections apply. A Competent Person Scheme registered installer gives financial protection to cover the event of non-compliant work being found where the installation company has gone out of business¹⁴. For solid wall insulation under the Energy Company Obligation and the Great British Insulation Scheme, the Installation Assurance Authority will cover the cost of repairs up to £25,000 where these are within the terms of the original, still-valid guarantee, including where the original installer has gone bust, up from a previous cap of £20,000¹⁵.

Finance arrangements can also be caught. Official guidance lists payment plans, where the installation is paid for in instalments, and unsecured personal loans among the potentially eligible arrangements, where the property owner becomes the legal owner⁸. Whether a particular arrangement is covered depends on the scheme and the policy.