The fitter didn't even think to remove the warning label.

Ah, but was the thermal insulation present when the lights were fitted or did someone else add it afterwards? (semi-serious comment...)

   - Andy.

I should have pointed out that these are new homes. A dispute has arisen about some aspects of the work carried out by the electrical contractor. In this case, he would have been well aware that thermal insulation was to be installed and without him specifically requiring measures to prevent the insulation covering the type of fittings shown in the photo, he has clearly not demonstrated compliance with 7671. 
The problem is that I have to code the issue. Having carefully examined the install to ensure that the fittings are well clear of joists and understanding that the thermal insulation is effectively classed as non combustible, I am leaning towards the conclusion that the likely impact is one of lamp longevity rather than a potential ignition source. However, it’s late and I need to ruminate with a clearer head. 

Is the primary concern the lack of fire-rated downlights with rooms above (527.1.2)

lyledunn said:

I am leaning towards the conclusion that the likely impact is one of lamp longevity rather than a potential ignition source.

Could the lamps themselves not melt or catch fire?

If the issue is only lamp longevity, C3 (of sorts), but on the evidence so far, I find it difficult to see how an EIC could be issued.

AMK said:

Is the primary concern the lack of fire-rated downlights with rooms above (527.1.2)

That regulation is a bit of a catch-all but it has to be considered in terms of what the Building Regulations require. For a two storey dwelling, the first floor needs to have a fire resistance of 30/15/15 REI (sometimes referred to as 30minute modified). Where certain minimum parameters are met for each element of the floor construction, downlights with a specific fire rating may not be required. That is not to say that benefit would not be had by installing them.

See Appendix C Best Practice Guide 5 issued by Electrical Safety First. In this case the floor construction is much more than those parameters demand.

But considering fire barriers, sealing arrangements, and protection against thermal effects, the absence of fire hoods on open-back downlights would not comply with regulations 537.1.2. 

I take it you mean 527.1.2 which refers to "wiring systems". A luminaire would not be part of a wiring system.

I am not being argumentative. I acknowledge that 7671 and, indeed, the Building Regulations, provide for minimum standards which can be augmented at the discretion of the person applying them. However, I must return a report that is technically correct with regards to the requirements of the standards being quoted in it rather than being prejudiced to individual preference. 

Sorry, yes 527.1.2.

I understand that you are not being argumentative, and I am here to assist as best as I can. In my experience, I have consistently referred to Regulation 527.1.2 when conducting EICRs for installations where ceiling fire barriers are penetrated by downlighters, particularly if there are rooms above. 

lyledunn said:

There are over 1000 of these fittings, all covered in at least one layer of glass wool type thermal insulation.

'Insulation' is defined in BS 7671.

Insulation. Suitable non-conductive material enclosing, surrounding or supporting a conductor.

So, must be OK then ?

(Only kidding ... I think this is suitably covered otherwise in the Standard).