Alternative Dispute Resolution scheme for brokers and Third Party Intermediaries: what your Microbusiness needs to know

This page provides information about a Third Party Intermediary (TPI) Alternative Dispute Resolution scheme for microbusinesses. We encourage all parties to seek independent legal advice on their obligations and duties.  Ofgem is unable to provide legal advice.

The rules have changed for suppliers dealing with Microbusiness contracts in the energy market. This is a result of the Microbusiness Strategic Review, published in March 2022.

From 1 December 2022, suppliers must only work with Third Party Intermediaries (TPI), such as energy brokers, who are registered with a qualifying alternative dispute resolution scheme (ADR).

Another requirement is the Provision of principal contractual terms to microbusiness customers to include Third Party cost information. This obligation came into force on the 1 October 2022.  

Relevant definitions

‘Third Party’ means a third party organisation or individual that, either on its own or through arrangements with other organisations or individuals, provides information and/or advice to a Microbusiness Consumer about the licensee’s Charges and/or other terms and conditions and whose payment or other consideration for doing so is made or processed by the licensee.

‘Third Party Costs’ means any fees, commission or other consideration including a benefit of any kind, processed by the licensee and paid or made or due to be paid or made to the Third Party in respect of a Microbusiness Consumer Contract that are passed on to the Microbusiness Consumer. Throughout this document Microbusiness consumer contract refers to the contract between the microbusiness and the energy TPI/broker, unless explicitly stated otherwise.

‘Relevant Third Party Activities’ means any activity undertaken by a Third Party in respect of a Micro Business Supply Contract including (but without prejudice to the generality of the foregoing): (a) any written or oral communications relating to the supply of electricity to a Microbusiness Consumer including: (i) any pre-sales communications; (ii) any communications regarding Billing or Contractual Information; and (iii)any matters falling within the scope of standard conditions 7A, 14, 14A and 21B (insofar as they relate to a Microbusiness Consumer); and (b) any processing of information relating to the supply of electricity to a Micro Business Consumer, together with any other Relevant Activities as the Authority may direct from time to time, following consultation

‘Microbusiness Consumer’: a non-domestic consumer is defined as a microbusiness if they:

• employ fewer than 10 employees (or their full time equivalent) and has an annual turnover or balance sheet no greater than €2 million; or
• uses no more than 100,000 kWh of electricity per year; or
• uses no more than 293,000 kWh of gas per year.

Your business will qualify as a microbusiness for both gas and electricity if it meets a) the employee and b) either the turnover or the balance sheet criteria. If it doesn’t meet those criteria but your business uses no more than the defined usage for either gas or electricity, it does qualify as a microbusiness for that fuel.  If it uses no more than the defined usage for both fuels, it qualifies as a microbusiness for both gas and electricity.  

‘Relevant Third Party Activities’ means any activity undertaken by a Third Party in respect of a Microbusiness Supply Contract including (included but not limited to) : (a) any written or oral communications relating to the supply of electricity and/or gas to a Microbusiness Consumer including: (i) any pre-sales communications; (ii) any communications regarding Billing or Contractual Information; and (iii)any matters falling within the scope of standard conditions 7A, 14, 14A and 21B (insofar as they relate to a Microbusiness Consumer); and (b) any processing of information relating to the supply of electricity to a Microbusiness Consumer, together with any other Relevant Activities as the Authority may direct from time to time, following consultation

‘TPI’ refers to Third Party Intermediary

‘ADR’ means ‘Alternative Dispute Resolution’ and refers to a qualifying dispute settlement scheme as defined under SLC 20.5D: any scheme of dispute settlement, resolution and/or redress operated by the Relevant Energy Ombudsman or such other organisation as demonstrably provides independent, fair, effective and transparent out-of court dispute settlement relating to Relevant Third Party Activities and constitutes a Qualifying Dispute Settlement Scheme in accordance with any guidance issued by the Authority. For clarity, in this document an ADR scheme refers only to the broker ADR scheme and not the supplier energy ADR scheme.