Third-party intermediaries: supporting better outcomes for consumers

Intermediaries, also called TPIs, are businesses, such as energy brokers and price comparison websites, who act on behalf of customers to find and arrange energy contracts between customers and suppliers. Homes and businesses deserve transparent, fair and effective support when they use the energy market. Intermediaries have an important role to play in providing this support and we now have an opportunity to help shape a more trusted and customer-focused sector.

We are preparing to regulate this sector. This is an important step towards strengthening protections for homes and businesses that rely on intermediaries when they want to find the best energy deal.

Why we need to regulate 

Intermediaries can provide significant benefits to customers. They can help guide homes and businesses through a complex market so that they can understand their options and access products and services that meet their energy needs.

However, we’ve identified concerns in some parts of the market, including a lack of transparency, misselling, hidden commissions and poor access to help when things go wrong. These issues can undermine trust and make it harder for customers to make informed decisions.

The government’s decision to introduce regulation reflects a clear view that this is the best way to strengthen consumer protections and improve outcomes. But regulation is not just about addressing harms. Good regulation can encourage innovation and support growth, increase trust, and create a market that works in the best interest of customers.

What we expect for homes and businesses

We recently published our consumer outcomes strategic direction, which sets out the standards we expect energy markets to deliver for consumers.

We believe that homes and businesses who use intermediaries should experience similar core outcomes as those engaging directly with suppliers.

Put simply, homes and businesses should be able to expect:

• fair treatment
• clear and transparent information
• services that meet their needs

While we wait for our formal powers, we wanted to put the consumer outcomes we have spoken about for the energy sector in the context of intermediaries. These underpin our good practice principles for intermediaries. We have focussed on three of the consumer outcomes that we consider particularly relevant  and translated them into practical behaviours and principles that intermediaries can adopt today. These outcomes mean that customers:

• get clear, accurate and timely information to help them make informed choices
• get their concerns and complaints addressed fairly, effectively, and promptly
• are charged prices that reflect fair value for the service the intermediary provides them

These good practice principles are intended to help intermediaries, not hinder them. These are not enforceable rules. Instead, they set out our starting views on what good looks like. Intermediaries that seek to consistently achieve these positive outcomes for their customers are likely to be well set up for future regulation. 

Our future approach

The government has set out its intention to appoint Ofgem as the regulator for the sector and to provide powers to create rules, monitor the market and require intermediaries to register before operating.

We want to introduce regulation that will protect customers but that does not over-regulate. Getting this balance right is important. Our approach will be evidence-led and we are starting by making sure we have a clear understanding of how the sector operates. That is why we are gathering data from across the market, including intermediaries, consumer groups, suppliers and customers, to build a comprehensive picture. We also want to know about innovative and agile regulatory practices in other sectors – we don’t want to just replicate how we regulate suppliers, we want to explore how we can regulate a large number of businesses in an efficient way.

We recognise that many intermediaries already deliver high standards of service and have valuable expertise to contribute. We want to work collaboratively with the sector as regulation develops, learning from existing good practice and ensuring any future framework is effective, targeted and proportionate.

Next steps

We encourage all intermediaries to review our good practice principles and begin aligning with these in day-to-day operations. By taking positive steps now, the sector can help raise standards today while laying the foundations for a successful transition to future regulation.

We want to complete our review of the sector this year. We will look at what we have found and the suggestions that have been sent in. Next year we will set out our starting ideas about how we can target effective regulation and seek your views on them. We want to hear from you and encourage you to take this opportunity to contribute to building the right regulation that will support good intermediaries.

If you are an intermediary and do not already take part in our TPI Forums, please email us and ask to be added to our mailing list so that you can hear about what we are doing and get notifications about opportunities to contribute, including a short online survey form where you can send us information about your company and your thoughts about regulation.

Your insights will help us develop a framework that protects consumers, supports innovation and enables a trusted, thriving intermediary market.

Get in touch with us by emailing TPI@Ofgem.gov.uk.

Read Setting up energy contracts: good practice. 

Read Third-party intermediaries (TPIs) market review: call for input.