Rob Church, Associate Partner for Smart Metering and Smarter Markets at Ofgem writes about getting fairer treatment for businesses.
Last summer marked the start of a step up in protection for businesses in the energy market. All suppliers now have enforceable standards of conduct to meet meaning they must treat small firms fairly, or risk enforcement action by Ofgem. Other changes include 160,000 more small businesses now benefitting from rules which give them clearer information on their contracts.
We know that businesses are concerned about the sales practices of some third party intermediaries (TPIs) and we are determined to clamp down on this. Last November we were given powers by Government to enforce the Business Protection Against Misleading Marketing regulations after successfully making a case to them. These rules allow us to tackle brokers that missell to business.
The next stage is to put in place requirements on all TPIs to be fair, honest and transparent with their customers. We have proposed to introduce a new industry-wide code practice for TPIs to do this and to help stamp out poor sales tactics. The code will require TPIs to be transparent about whether they charge fees for their services, the suppliers they are affiliated with, and the contracts they offer.
Getting the right regulatory and governance arrangements in place for the code are very important. In our February 2014 consultation, we put forward a number of options for this. Our preference is that a licence condition is placed on suppliers requiring them to only work with TPIs that are accredited under the Code. This will ensure that suppliers and TPIs are jointly accountable for giving a high quality service to business consumers. We also want the code to be governed by an independent board, with ultimate oversight by Ofgem, including on the content of the code.
As with all of our policy development, we are always interested in the opinions of stakeholders on our proposals. This is one of the reasons why I attended the TELCA conferences last week where I got a good sense of the detailed issues TPIs are worried about and a clear message that people want Ofgem involved in the governance arrangements to make sure they are independent. We have also extended the deadline for responses to the consultation until the end of June so that there are more opportunities for stakeholders to share their views. Any business, TPI or other interested group can get in touch with us at [email protected]
We are aiming to finalise our policy and develop the licence conditions for suppliers by the end of the year. Once in place the code will complement the changes we have brought in to give businesses more protection and give reassurance that brokers are treating them fairly.