30th July 2020

Energy Regulator Ofgem has announced a strategic review into microbusinesses particularly focusing on poor practice from energy brokers

The measures are intended to help the sector labelled as 'Microbusinesses' to get a fairer deal in the energy market and ensure that practices used by unethical energy brokers are stamped out.

Covid-19 has had a huge impact on the energy market and Ofgem state that now more than ever,  fair and transparent pricing must be in place for microbusiness organisations. The bulk of this sector use the services of energy brokers to secure their contracts and concern has been raised many times over malpractices and unfair pricing of contracts.

The new proposals being suggested place an onus on energy suppliers to ensure that any brokers that they work with are conducting themselves properly in the market place as well as offering more transparency on billing and commission charges.

Philippa Pickford, Ofgem’s Director of Future Retail Markets, Consumers & Markets said:

Providing greater transparency and tackling unscrupulous brokers will help microbusinesses get a better, fairer energy deal. This is more important than epver as microbusinesses emerge from the challenges posed by the Covid-19 pandemic.

“These proposals are part of Ofgem’s wider work to improve the energy retail market through smart metering, extra support for vulnerable customers, plus faster and more reliable switching”.

Most suppliers will be pleased to hear about poor practices being clamped down on as this will undoubtedly help to raise a better profile of energy suppliers within the UK market. However, some suppliers may feel that this places an extra regulatory burden on suppliers who already have to deal and adhere to a raft of regulatory requirements.

The full extent of the proposal can be read here but a summary of the measures can be seen below:

  • Broker conduct principle: Introducing  a principles-based requirement for suppliers to ensure brokers they work with conduct themselves appropriately
  • Broker dispute resolution: Introducing a requirement for suppliers to only work with brokers signed up to an alternative dispute resolution scheme
  • Informed contract choices: Applying targeted sales and marketing rules to suppliers and brokers they work with via supply licence changes
  • Broker commission transparency: Clarifying and strengthening existing supply licence obligations to provide information about broker commission payments on contracts, bills and account statements
  • Cooling-off period: Introducing a 14 day cooling-off period for microbusiness contracts
  • Contract extensions: Requiring suppliers to maintain existing contract rates for up to 30 days while issues with a blocked switch are being resolved
  • Banning notification requirements: Banning suppliers from requiring microbusinesses to provide notice of their intent to switch