6.3 Deposits and further advance payments
If a member requires the consumer to pay
a deposit when the contract is signed, this will constitute a reasonable percentage of the estimated overall costs of the work as set out in the contract, for example 15 per cent. It
should not exceed 25 per cent under any circumstances. Members may only use this money for work under the contract, for example for purchasing goods. Members will repay it promptly if the contract is cancelled in line with the conditions set out in section 6.2 of this Code. This is a very important requirement of the Code.
If the member subsequently requires a further advance payment to be made by the consumer, this must constitute a reasonable percentage of the overall costs of the work and will only be used for work under the contract, for example for purchasing goods.
Under no circumstances can the deposit and the further advance payment, taken together, exceed 60 per cent of the estimated overall costs of the work.
Members can only require a further advance payment no more than three weeks before the agreed delivery date of all the goods to be installed. Members will set out clearly in the contract the amount and timing of all payments required.
Members must protect any deposit and any further advance payment, such that, if they should fall into receivership, administration or bankruptcy before the contract has been completed, the consumer will be able to have his or her contract completed at no additional cost by another Code member.
Members can place such funds in a 'client' or other third party account or use the protected payment scheme which the Code administrator has arranged for members. The Code administrator has prepared
guidance on third party accounts here. Such funds must be separate from those accounts linked to the member's own credit and banking facilities and should only be used with the consumer's consent. (This can be obtained in advance when the consumer signs the contract.)
In addition, any deposits and advance payments must be insured. For this purpose, the Code administrator arranged an insurance scheme with Quality Assured National Warranties (QANW) in November 2010. In February 2012 this became part of the Deposit and Workmanship Warranty Insurance (DAWWI) Scheme. Members who take deposits and advance payments, and who cannot demonstrate that they have equivalent cover in place should take part in the Scheme. (See also section 8.1 below.) Members must inform consumers accurately about the arrangements they have in place to comply with this section of the Code.
Where a member uses a consumer's money, paid in advance, to purchase goods, and where those goods are delivered to the member, the member will hold the goods on trust for the consumer and will keep them separate from its own goods and those of third parties. The member will keep such goods properly stored, protected, insured and identified as the consumer's property. The consumer should be able to inspect or repossess the goods at any time. The legal title to those goods, or the proportion of them that has already been paid for, should pass directly to the consumer. In this way, if the member falls into receivership, administration or bankruptcy before the installation takes place, the goods will remain the consumer's property.
