Ofgem will widen its powers to protect 150,000 more small businesses and bring in a new code of practice for energy brokers, the watchdog said today.
Under the business retail market review, energy suppliers could also face fines if they don’t adhere to tough standards of conduct for how they treat small businesses.
Previously small businesses which employ 10 people or less were protected by the watchdog’s safeguards to make sure contract terms are clear.
The rules could now protect customers which typically spend up to £10,000 a year on each fuel. Ofgem is asking for views on the size of businesses that should be covered by this reform with the hope of deciding this in the New Year.
Businesses have reported that switching suppliers can sometimes be time consuming, especially if they have been barred from switching without a clear reason.
The regulator says it is “closely monitoring” suppliers on this and is already investigating British Gas Business over allegations that it incorrectly objected to some businesses switching.
An Ofgem licence condition stops suppliers from blocking a switch unless there are legitimate reasons.
Andrew Wright, Senior Partner, Markets, said: “Our retail market review showed that small businesses want fairer treatment from suppliers, clearer information about contracts and more protection from mis-selling. Our proposed reforms seek to address these issues. We urge suppliers to show they are committed to restoring the confidence of business consumers by getting behind our proposals.”
Businesses are also risk of “poor behaviour” from some brokers, for example finding themselves contracted to a new supplier with higher rates than expected.
Energy brokers can also now expect Ofgem to get stricter: it is planning to clean up the practices by developing an industry-wide code of practice and has asked Government for more powers to take action against brokers who mislead business customers.