New rules for suppliers and brokers to protect businesses from misselling

Publication date
14th February 2014
Information types
Policy areas

We are proposing a new code of practice to further protect businesses from misselling by some energy brokers.

Our proposals will require suppliers to only work with brokers or Third Party Intermediaries (TPIs) that are accredited under the code if they want to market deals through them.

TPIs include switching websites, energy brokers and energy efficiency advice providers who interact with energy consumers. They can offer advice and products to assist with a range of functions including energy procurement, efficiency and management. They play an important role in helping businesses compare and choose tariffs and make their energy decisions. However, some do not operate fairly and mislead businesses.

The new code will clamp down on poor practices by some TPIs and provide more transparency for consumers on their fees, the contracts they offer and which suppliers they represent.

Better protection

Since November 2013, we have had powers to act against brokers and TPIs that are marketing energy products or services to businesses in a misleading way.

We have already put in place rules to give businesses better protection and more clarity on their options when their contracts come to an end through our retail market reforms for a simpler, clearer, fairer energy market. The rules are backed by our powers to levy fines if necessary.

To further increase protection, we have developed the code of practice for TPIs so that they treat businesses fairly when advising them on the best deals.

By requiring suppliers to only work with accredited TPIs, we will ensure that suppliers and TPIs are jointly accountable for giving a high quality service to business consumers. This will help businesses have more confidence when engaging in the market and picking out the best deals for themselves.

The proposed code would be governed by an independent board comprising suppliers, TPIs and consumer groups with oversight from Ofgem. This independent industry body would have powers to expel a TPI if it wasn’t complying with the code.

Improving clarity

We have also reviewed suppliers’ use of automatic rollovers of fixed term contracts for businesses. Under our proposals, small businesses will only need to give a maximum of 30 days’ notice that they want to switch suppliers at the end of their contract. Currently notice periods range from 30-90 days. Streamlining this across suppliers will end confusion for businesses on when they have tell their supplier if they want to switch at the end of the contract.  

At the end of the contract, we are also proposing suppliers provide businesses with information on how much energy they have used in the last year and provide a comparison between their current rate and new rates they are offering. This will make it easier for businesses to compare other offers. Suppliers will also have to acknowledge in writing any request that a business makes to switch at the end of their contract.

Consultation

We have worked closely with stakeholders in developing our proposals. So far this has involved consumer research and engagement with industry as well as working group discussions with TPIs, suppliers and consumer groups.

The code and regulation for suppliers should be in place by the end of the year, and we have today opened our consultations on the draft code of practice for TPIs and the automatic rollover proposals.

To find out more, see our full press release.