Ofgem’s review of firms which act as go-betweens for customers and suppliers in the energy sector has been described as “too vague” – but others believe some of their plans would get rid of the “cowboys”.
The regulator is carrying out an investigation of third party intermediaries or TPIs – which includes switching websites, energy brokers and energy efficiency advice providers – as part of its reform of the retail electricity market.
So far the rules governing the way TPIs, consultants and brokers are fairly lax. While many are signed up to voluntary codes of conduct run by Utilities Intermediaries Association (UIA) or more recently E.ON’s rival code, this has left room for unscrupulous operators to work outside of the rules.
Ofgem says its investigation to protect consumers is looking at a number of options – including just keeping the “status quo” and bringing out “non-binding guidance” for TPI work with consumers.
The trade association for TPIs which deal with energy purchasing contracts says this is just too “vague” and questioned whether the regulator has the power to act.
Gill Walton at the UIA told ELN: “Ofgem do not appear to have any real idea of where they wish to take this and currently it is both vague and unhelpful to the market.
“Indeed it is questionable as to whether this issue is even within their gift under current legislation, a question which has been asked but to date remains unanswered,” she added.
Others agreed the review was too unfocused but were more positive about the suggestions.
Ofgem’s stricter ideas include a voluntary code of practice for all TPIs – either setting out arrangements to oversee the sector or with “strict accreditation, audit and sanctions process”, making suppliers only work with accredited TPIs or direct regulation.
Scott Byrom, an energy expert at UK Power, the energy comparison site for homes and businesses which is part of Make It Cheaper (and not to be confused with UK Power Networks) agreed the consultation is “a bit woolly”.
He told ELN: “I agree it’s a bit woolly at the moment but the concept and theory to help protect consumers is a fair one… I’m a big advocate of the ‘Code of Confidence’ which the main players sign up to and I can assure you those around that table are fighting for the customer.”
He said a code which showed consumers the third party they are using has been approved by both suppliers and regulators would help get rid of TPI cowboys.
Mr Byrom explained: “This puts a control around who suppliers work with and helps eliminate any “cowboys” who may be in town purely to line their pockets with a quick buck at the cost of innocent customers trying to save money.”