Almost half of UK businesses said they value help from third parties to compare energy prices across suppliers and negotiate the complexity of their contracts.
That’s according to a new survey of 508 businesses, which claims a majority of them back Ofgem’s Code of Practice. It aims to increase the confidence of business customers engaging with energy brokers and 71% of firms believe the new guidelines and regulations would improve the services they provide.
Some of the proposals in the regulator’s draft code of practice include energy brokers that sign up to it must make their customers aware there is a charge or fee associated with their services, prior to providing any payment the consumer may make, either directly or indirectly. The broker must also make them aware they can be given detailed information on the charges or fees for the products or services upon request and it must be set out in clear language.
Ofgem is also carrying out an investigation of third party intermediaries (TPIs) as part of it retail electricity market reform, which has been described as “too vague” by some.
The new survey shows most businesses either believe their energy broker is providing a free service (37%) or do not know how much they are being charged (42%) while 38% of firms do not think brokers’ charges are clear or easily understood.
Robert Buckley, Director of Cornwall Energy, which conducted the survey and co-author of the report said: “Ofgem’s work on a Code of Practice is very important. This survey says that how brokers levy their charges should be an important part of the Code because many of those who use brokers think they are getting a free service or just don’t know what they are paying.
“We believe the best way forward would be for a mandatory Code of Practice where brokers are subject to a binding set of requirements backed by enforcement powers. In order to maximise the protection of businesses and raise the standards of brokers, brokers should be subject to minimum requirements with close monitoring.”
The report also shows a significant proportion of businesses are not aware of their contract end dates or the existence of roll-overs. Most firms (68%) contacted their suppliers or brokers when last seeking a new energy contract, with larger businesses (34%) more likely to do so than smaller firms.
Larger businesses are also more likely to buy other services, including market information and bill validation, with 68% of them compared to 29% of micro-businesses.