For businesses
Deposit protection for tradesmen: what you can offer a customer
Deposit protection for tradesmen comes in four checkable forms: card payment (Section 75 or chargeback), deposit protection insurance through a scheme or warranty provider such as QANW, IWA, HIES or GGFi, consumer-code membership that requires it, and escrow. Each refunds the customer if the business fails before delivery; none costs more than a few pounds per job. Offering one, and naming it on the quote, is the single fastest way to turn a hesitant deposit into a paid one.
Key facts
- A deposit paid by bank transfer to a company that later fails is usually unrecoverable; the customer is an unsecured creditor (Insolvency Act 1986, s.175 and Sch. 6).
- Any payment by credit card towards a purchase of £100–£30,000 makes the card issuer jointly liable for the whole contract (Consumer Credit Act 1974, s.75); debit and credit cards also carry scheme chargeback rights for goods and services not received.
- Installers of MCS-certified renewable systems must belong to a consumer code (RECC or HIES) whose rules include deposit protection for the customer (MCS scheme requirements; RECC and HIES consumer codes).
- FENSA-registered window installers are required to offer an insurance-backed guarantee, and deposit protection is available through the same providers (FENSA scheme rules).
- In SafeToPay reports every verdict is accompanied by deposit guidance that tells the customer to pay the first stage by card and to look for scheme deposit protection where the trade has it (methodology v1.2).
Why customers ask, and what they are asking for
A customer asking “is my deposit protected?” wants one thing: a route to get the money back that does not depend on the business still existing. Consumer guides now say plainly that a bank transfer to a company that goes bust is gone, and that ranking behind secured and preferential creditors in a liquidation means small customers rarely see a penny. So the question is not about your honesty; it is about a mechanism that survives your insolvency.
There are four such mechanisms a small trade business can offer. They differ in cost, in which trades can access them and in what the customer can verify — and the last point matters most, because protection the customer cannot check is, from their side, just a claim.
Four forms of deposit protection, compared
Card payment is available to every business today; the other three depend on trade, scheme membership or a third-party provider.
| Mechanism | How it protects the customer | Who can offer it | Cost to the business | Customer verifies it by |
|---|---|---|---|---|
| Card payment (credit or debit) | Credit card: Section 75 — issuer jointly liable for the whole contract when £100–£30,000 is involved. Debit or credit: chargeback for goods or services not received, usually within 120 days | Any business with a card terminal or payment link | About 1.5–2% of the amount taken by card | Paying by card; nothing else to check |
| Deposit protection insurance (via IBG providers) | Insurer refunds the deposit if the business ceases trading before installation; usually combined with an insurance-backed guarantee on the finished work | Businesses registered with a provider such as QANW, IWA, HIES, GGFi — often through FENSA, Certass, TrustMark or a consumer code | A per-job fee, typically tens of pounds, sometimes built into scheme fees | Policy or certificate number from the provider; the provider’s own lookup or helpline |
| Consumer code membership | The code requires deposit protection and independent dispute resolution; some codes cap the deposit percentage | Renewables (RECC, HIES), glazing (Glazing Arbitration / GGF codes), other CTSI-approved codes | Annual membership | The code’s public member register |
| Escrow | Money held by a regulated third party and released on agreed milestones; never in the business’s account until earned | Any business, through an FCA-authorised escrow provider | A fee per transaction, typically a small percentage | The provider’s FCA authorisation and the escrow account confirmation |
Card payment is protection you already have
A card link for the deposit is the only option on the table that needs no membership, no provider and no paperwork, and it is the one customers understand best. Take the first stage by card, and the customer has the card issuer standing behind the whole contract for a fee of about £60 on a £4,000 deposit. Remember that surcharging card payments has been illegal since 2018; price the job to include it. The detail of why £100 on a card covers a £10,000 job is in the Section 75 guide.
Deposit protection insurance is the trade standard where it exists
For windows, doors, conservatories, solar and heat pumps, deposit protection through an insurance-backed guarantee provider is expected, and a business without it stands out. The certificate number is the proof: put it on the quote with the provider’s name, so the customer can look it up before paying. A logo with no number is worth nothing to them, and displaying a provider’s or scheme’s mark you do not hold is a banned commercial practice.
Consumer codes bring protection with the membership
Codes approved by the Chartered Trading Standards Institute require their members to protect deposits, cap deposits in some cases and provide independent dispute resolution. For MCS renewable installations code membership is compulsory. The membership register is public, so a customer can confirm it in a minute — which is precisely what makes it worth stating.
Escrow suits large, staged jobs
Escrow is rare in home improvement but well suited to five-figure bespoke work: the customer funds the account at the start, the business sees the money is there, and each stage is released on completion. The provider must be FCA-authorised for the arrangement to be safe, and the customer can check that on the FCA register. The fee is a small percentage and, for a nervous customer on a large job, it can be the difference between winning and losing the order.
The line for the quote: “Your deposit is protected by [provider], certificate number [XXXX], which refunds it in full if we cease trading before installation. You can also pay the deposit by card.” One sentence with a number the customer can check.
What is available by trade
Protection is trade-specific, so the table gives the realistic options for each rather than a generic answer.
| Trade | Normal deposit | Scheme or code protection available | Realistic minimum to offer |
|---|---|---|---|
| Windows, doors, conservatories | 25–50% | Yes — deposit protection through FENSA or Certass installers’ IBG providers (QANW, IWA, GGFi and others) | Deposit protection certificate + card |
| Solar, batteries, heat pumps | 10–30% | Yes — compulsory via RECC or HIES for MCS-certified installers | Code membership number + card |
| Kitchens, bedrooms, fitted furniture | 25–50% | Limited — some IBG providers cover kitchen installers; no compulsory code | Card for the deposit; stages behind the work |
| Bespoke staircases, joinery | 30–50% | Rare | Card for the deposit; escrow on large jobs |
| Building work, extensions, lofts | 5–20% in stages | Rare for the deposit; warranties available for the work (e.g. FMB, TrustMark IBG) | Small deposit by card; milestone stages; retention |
| Roofing, driveways, landscaping | 10–25% | Some IBG providers; TrustMark-registered firms may offer guarantees | Card for the deposit; stages |
| Heating and electrical | 10–30% | Gas Safe and NICEIC are competence registers, not deposit schemes; some IBG providers cover boiler installs | Card; small deposit |
Two real cases
Both from live checks; names withheld, figures as filed or reported.
What card protection did for one customer
The customer paid £500 of a £13,600 kitchen by credit card and the rest by transfer in stages. The company ceased trading after the first stage. Because part of the price had gone on the card, the card issuer was jointly liable for the whole contract under Section 75, and the customer recovered the balance from the issuer rather than joining the creditors’ list. The business had offered card payment for the deposit without being asked — and it is the reason a customer later described the firm as one they would use again.
Building services company with TrustMark and NICEIC logos, no numbers
Strike-off notice in the Gazette, accounts overdue, £16 in cash on the last filing, bank transfer only. The logos suggested protection; neither carried a registration number, and neither register is a deposit scheme in any case. Customers who paid deposits by transfer had no route back once the company was dissolved. The report’s guidance for a record like this is simply: do not pay a deposit.
Enter a website address, e.g. smithkitchens.co.uk
How to offer it, in five steps
Offering deposit protection takes one afternoon; the customer-facing part is a sentence on the quote.
- Set up card payment today — a payment link from any major provider is enough for deposits; a terminal is optional. Price jobs to include the fee.
- Find the protection for your trade from the table above: your scheme’s IBG providers, the consumer code for your sector, or an FCA-authorised escrow service for large jobs.
- Register and get the certificate or membership number. This number is what the customer will check.
- Put it on the quote and the website next to the registered company name and number: provider, certificate number, what it refunds and when.
- Write the deposit terms to match — what the deposit covers, what is refunded on cancellation, and that the first stage can be paid by card. The wording is in deposit terms for a small business.
What is not deposit protection
Several things businesses point to as reassurance do nothing for the deposit if the company fails, and customers are increasingly told which.
- Public liability insurance. Covers damage and injury during the work; pays nothing if you cease trading.
- A workmanship guarantee from the business. Only as good as the business; disappears with it. An insurance-backed guarantee is different, because an insurer stands behind it.
- Gas Safe, NICEIC, FENSA registration on its own. Competence registers, not deposit schemes. FENSA additionally requires an IBG offer; the deposit cover comes from the IBG provider, not from FENSA itself.
- Review-site membership. Checkatrade, Trustpilot and similar verify nothing about the money.
- “Non-refundable deposit” terms. These protect the business, not the customer, and are often unenforceable in any case.
- A strong-looking website. Templates are cheap; a check compares the site with the register precisely because the two so often disagree.
Customers running a check see the difference in the report: scheme registration under Licences and schemes, deposit guidance under Paying the deposit safely, and the balance sheet — the only real backstop for an unprotected transfer — under Who you’re paying. A business that offers protection turns the last of those from a risk into a footnote.
Show it where the customer looks
Deposit protection only helps if the customer knows about it before deciding, so name it on the quote, in the footer next to the company number, and in the record a customer will check. The free verified business badge links from your website to your full public report, where scheme registrations appear as verified lines and deposit guidance already tells the customer to pay the first stage by card. What else that report shows is in what customers see on Companies House.
Enter a website address, e.g. smithkitchens.co.uk
Frequently asked questions
Am I legally required to protect a customer’s deposit?
Not in general. It is compulsory where scheme or code rules require it — MCS renewable installations through RECC or HIES, and the IBG requirement for FENSA installers — and otherwise a commercial choice. Customers are increasingly told to prefer businesses that offer it, so the choice affects conversion even where it is not required.
Does taking a card deposit really protect the whole job?
For credit cards, yes: Section 75 makes the issuer jointly liable for the whole contract once any part of a £100–£30,000 purchase goes on the card, even £100. For debit cards, chargeback covers the amount paid by card for goods or services not received, usually within 120 days. Paying through a third party such as PayPal can break the Section 75 chain.
How much does deposit protection insurance cost?
Typically tens of pounds per job when bought through an IBG provider, sometimes bundled into a scheme’s annual fees. Check the current tariff with the provider; costs vary by trade and by the value of the installation.
Is an insurance-backed guarantee the same as deposit protection?
No. An insurance-backed guarantee covers the finished work if the business later ceases trading; deposit protection covers the money paid before the work if the business fails first. Providers commonly sell both together, but the quote should say which the customer is getting.
Can I use my own client account instead of escrow?
A business’s own “client account” is not protected in an insolvency unless it is a genuine trust arrangement, and customers cannot verify it. Escrow through an FCA-authorised provider is the checkable version. For most trades card payment is simpler and achieves the same reassurance.
Should I mention deposit protection if my record is strong anyway?
Yes. Even a solvent, long-established company benefits, because the customer does not have to read a balance sheet to feel safe. It also removes the deposit conversation for the customers who would otherwise refuse or negotiate it down.
Sources
- Consumer Credit Act 1974, section 75 — legislation.gov.uk
- Insolvency Act 1986 — order of creditors — legislation.gov.uk
- Consumer Rights (Payment Surcharges) Regulations 2012 — legislation.gov.uk
- MCS — scheme requirements for certified installers · RECC consumer code · HIES consumer code
- FENSA — installer requirements including insurance-backed guarantees
- CTSI — Consumer Codes Approval Scheme
- FCA Financial Services Register
- SafeToPay methodology v1.2 — deposit guidance