The competition watchdog wants to see more manufacturers enter the market where “there are only a very small number of manufacturers supplying home insulation products.”
It is also calling for a new body to be set-up to oversee the quality of Green Deal work and handle complaints from homeowners.
The OFT received a number of complaints about the length of time it can take for new insulation products to be approved for use in the market.
It is now calling for product certification bodies to improve their processes to lower the barriers for manufacturers trying to develop innovative new products.
The OFT is also encouraging contractors and architects to be more open to specifying products from more than one UK product certification body.
OFT Director of Services, Infrastructure and Public Markets, Nisha Arora, said: “The home insulation sector is now worth some £700 million and it is important that people receive good quality, well-installed insulation that makes their homes more energy efficient.
“We hope that the recommendations in this report and our continuing work in this sector will encourage greater competition and choice and give consumers increased confidence to have insulation installed.”
Insulation giant Rockwool said: “We welcome the OFT’s report into the home insulation market. We think it is important for the industry to be scrutinised and to ensure that it is working in the best interest of consumers ahead of launch of the Green Deal in October.
“The success of the Green Deal will depend on consumer trust and confidence in the industry and Rockwool is determined to play its part by working with Government, consumers and the wider industry to make this happen.”