Findings of the Umbrella Scheme Consultation

December 22, 2021

MCS has published the findings from a consultation which aimed to establish how umbrella schemes operate, the forms they take and how they comply with current Standards. The umbrella scheme consultation launched at the end of September and invited industry participation in an information gathering exercise.

In this context, ‘umbrella schemes’ are operated by MCS certified organisations who typically complete the design and commissioning of a new system but subcontract all, or elements of, the installation of the system.

Responses to the consultation were anonymous, unless participants wanted to identify themselves. MCS received just over 100 responses to the questionnaire and in addition, spoke directly to a number of operators of umbrella schemes. These conversations provided for more detailed information than was possible to capture via an online questionnaire.

MCS is grateful for all of this input. This has provided a comprehensive set of findings that are summarised below. These findings support the next steps in the form of three ‘outcomes’ arising from the consultation. MCS intends to deliver on these outcomes during the first half of 2022.

Outcome 1: MCS will develop and issue clear guidance to Certification Bodies, who as a result, will be expected to both identify the operation of umbrella schemes in their base of MCS contractors and then effectively assess the associated compliance risks, proportionate to the scale and complexity of an umbrella scheme’s operations.

Outcome 2: During the first half of 2022, MCS will publish a report to share umbrella scheme best practice, acting as a benchmark for all schemes of this nature to aspire to. 

Outcome 3: MCS will assess how umbrella scheme customers are protected today, compared to and in contrast with what is written in MCS 001-1 in relation to Contracts with customers and Subcontracting arrangements. This assessment may result in changes to MCS 001-1 and MGD 001.

Responses were captured from umbrella scheme operators and MCS certified contractors, encompassing the entire range of MCS technologies.

42% of responders to the consultation stated that they currently run an ‘umbrella scheme’. Of this group, 36% run a scheme for the deployment of Air Source Heat Pumps, 24% for Ground/Water Source Heat Pumps, 16% for Solar PV and 11% for Solar Thermal. The remaining offer Biomass and Wind Turbines.

Of these umbrella scheme operators, 21% describe themselves as manufacturers.

Over 90% of all umbrella schemes that responded to the questionnaire, offer system designs including the associated calculations, manage the procurement and supply of a system’s components and are involved in the system’s handover to the customer.

Installation is the primary activity that is outsourced by umbrella schemes.

The most common aspect of a customer’s system that is contracted out by umbrella schemes, is the installation itself. 83% of scheme operators state that they use other contractors to complete installations. A further 61% of scheme operators trust post installation customer care to another party, typically the contracted installer.

96% of umbrella schemes that responded to the questionnaire, generate their own sales opportunities. 50% of schemes also take on projects whose sale originates from their contracted installers or other third parties.

Less than a quarter (23%) of umbrella schemes utilise zero / nominal value contracts when contracting with organisations who perform installations and other services on their behalf.

Concerns were raised that umbrella schemes offer an unfair advantage to those contractors who do not hold MCS certification over those that do, and that many of these schemes are not compliant with the Standard.

The operation of ‘umbrella schemes’ under MCS is a controversial subject, attracting debate both within the MCS Standards community and more broadly, across the industry sector. Based on the feedback provided to this consultation, the main challenges to the operation of umbrella schemes can be described as follows:

  • That umbrella scheme operators do not adequately manage the delivery of systems through the installers that they engage for their installation. This stems from a strongly held belief by a few responders that umbrella scheme operators are largely focused on generating sales opportunities, and then do not take responsibility for the subsequent installation.
  • This is in contrast to the responses received from umbrella scheme operators; 96% of them stated that they take responsibility for the design of new systems and 98% said that they are involved in system handover to the customer. There are umbrella scheme operators who engage with the customer throughout the sales process, the subsequent design phase, oversee the installation and in what appears to represent best practice, also offer customers a package of aftercare.
  • These schemes describe how they project manage the entirety of system’s delivery from end to end, including taking an active role in the oversight of the installation process. Further best practice arises from umbrella schemes that provide training and technical support to their installer contractors, recognising the link between installer competency and the quality of installation, and how this reflects on the reputation of their brand.
  • Several responders felt that umbrella schemes do not operate in compliance with the Standards as written and that these are schemes that provide access to the market for less scrupulous contractors who do not hold MCS certification themselves. A minority of responders felt that this situation was unfair on those contractors who work hard to maintain their own MCS certification, with the associated certification costs to their businesses.
  • The operation of umbrella schemes has not been adequately understood (until now) or documented. As a result, these schemes have been classified as large scale ‘subcontracting’ and are therefore unlikely to be compliant with the Subcontracting clauses included in MCS 001-1.

What is clear from the consultation responses and from feedback MCS has received previously, is that until this consultation there hasn’t been a full understanding of how umbrella schemes operate in practice. As a consequence and substantiated by feedback from scheme operators themselves, it can be argued that umbrella schemes have not been adequately assessed under the Certification Scheme; at least not in relation to a clear description of what constitutes an umbrella scheme and how its compliance should be determined.

Outcome 1: MCS will develop and issue clear guidance to Certification Bodies, who as a result, will be expected to both identify the operation of umbrella schemes in their base of MCS contractors and then effectively assess the associated compliance risks, proportionate to the scale and complexity of an umbrella scheme’s operations.

This will likely require Certification Bodies to undertake more extensive audits that can capture a greater level of evidence of compliance, to be driven by the volume and complexity of an umbrella scheme’s operations. This represents risk-based auditing and assessment.

Several responders state that umbrella schemes who deliver several hundred installations a year, receive the same ‘one size fits all’ Certification Body assessment as a single contractor who delivers tens of installations a year. Responders have suggested that this approach means that certification assessments take the same amount of time and attract the same costs, irrespective of the complexity and range of a contractor’s operations.

Support for umbrella schemes describes their role in growing the sector’s capacity and in  offering specialist support, including system design.

A significant number of responders believe umbrella schemes have a critical role to play in increasing the capacity of the sector. Even those responders who are critical of umbrella schemes, highlight the advantages of an installer working to a design that has been developed by a suitably qualified expert.

The consultation feedback suggests that if run properly, umbrella schemes can allow non-certified contractors to take part in the sector but that their delivery then needs to be managed closely, with responsibility for the quality of the final installation remaining with the umbrella scheme operator as the certified MCS contractor.

Evidence was presented to the consultation of umbrella schemes working well in the new build sector, and importantly, offering system design skills that some installers may not have, and may not have any desire to have, as they wish to ‘fit systems’ that have been designed by others with the necessary expertise.

What is clear from the evidence captured, is that there are excellent umbrella schemes, whose operations deliver consistently high quality installations for customers. This provides for an opportunity to document best practice.

Outcome 2: During the first half of 2022, MCS will publish a report to share umbrella scheme best practice, acting as a benchmark for all schemes of this nature to aspire to. 

Contractual compliance and single points of contact for the customer

What was less clear from the consultation responses is how umbrella schemes comply with MCS Standards as they are written today. Specific concerns were raised as to umbrella scheme compliance with requirements associated with a single point of contractual responsibility for ‘the sale and installation of a system’ and in relation to how subcontracting of the installation is managed, in line with MCS 001-1 clauses 4.10 Contracts and 4.11 Subcontracting respectively.

These clauses are intended to ensure that consumers do not fall between any gaps that might exist between the responsibilities of two or more organisations involved in the delivery of their installation.

In so far as contractual responsibilities are concerned, the feedback suggests that the market in contrast to the Standards, makes a distinction between routine sub-contracting of work by a MCS certified contractor and the operation of an umbrella scheme. As noted previously, only 23% of umbrella schemes who responded to this consultation utilise zero / nominal value contracts. However, there is evidence that ‘well run’ umbrella schemes provide comprehensive protections for customers, even though a customer has a contract with a ‘local installer’ who is operating under an MCS certified contractor’s umbrella scheme.

It is understood that risks to consumer protection occur when the responsibilities associated with a customer’s installation are not clearly defined. The question arising from this consultation is whether the consumer protections described by those umbrella scheme operators are effective, even though they may not be adequately described and therefore ‘allowed’ for under the Standards.

Early in 2022 and building upon the previous two ‘outcomes’ from this consultation, MCS will seek more evidence from umbrella scheme operators to better document compliance or otherwise with the contractual and consumer protection outcomes required by the Standard. This may give rise to changes to MCS 001-1 and the associated guidance covered in MGD 001.

It will be essential to clarify any issues of contractual responsibility, especially in light of the new separate MIS 3005 Heat Pump Design and Heat Pump Installation Standards that come into force on the 1st April 2022.

Outcome 3: MCS will assess how umbrella scheme customers are protected today, compared to and in contrast with what is written in MCS 001-1 in relation to Contracts with customers and Subcontracting arrangements. This assessment may result in changes to MCS 001-1 and MGD 001.

Although this consultation process has now closed and work will now begin to deliver on the three ‘outcomes’ identified, MCS remains open to further feedback as to the operation of umbrella schemes. If you wish to provide further feedback, please email the MCS Secretariat: meetings@mcscertified.com.

« Read more news

Read PlumbHeat

Not a member? Enter your details below for a sneak peek of our latest issue of our quarterly magazine.
Cover of theWinter issue issue
Cover of theAutumn Issue issue
Cover of theSummer 2021 issue