Source · Select Committees · Business and Trade Committee
Recommendation 36
36
Acknowledged
Paragraph: 151
The Government’s failure to regulate third-party intermediaries in combination with Ofgem’s failure to regulate energy...
Conclusion
The Government’s failure to regulate third-party intermediaries in combination with Ofgem’s failure to regulate energy suppliers led to third-party intermediaries promoting energy suppliers with flawed business models and unsustainable pricing. We are concerned that third-party intermediaries did not pay sufficient regard to understanding customers’ needs and ensuring customer service standards.
Government Response Summary
The government recognizes the risks to consumers from unregulated third-party intermediaries (TPIs), and is considering responses to a call for evidence while assessing the impact of recent market events. Ofgem has implemented reforms including requiring suppliers to only work with energy brokers signed up to a qualifying alternative dispute resolution scheme.
Paragraph Reference:
151
Government Response
Acknowledged
HM Government
Acknowledged
The government recognises that there are potential risks to consumers from the activities of third-party intermediaries (“TPIs”) operating outside the scope of the current regulatory framework. Government published a call for evidence in August 2021 to determine whether further regulatory intervention was required. The call for evidence focussed on the most commonly used TPIs, which typically help customers to switch suppliers, such as price comparison websites, auto-switching services and non-domestic brokers. We are considering the responses to the call for evidence, whilst also assessing the impact of recent market events, including to the role of TPIs in the future retail market. The government will set out next steps on the future of the retail market in due course. Ofgem has separately administered the Confidence Code, a voluntary accreditation scheme for domestic price comparison websites, since 2013. The Confidence Code includes requirements on complaints handling and commission arrangements. Ofgem has also implemented a package of reforms following its Microbusiness Strategic Review. These measures will take effect from October 2022 and include requirements on suppliers, in respect of their microbusiness customers, to only work with energy brokers signed up to a qualifying alternative dispute resolution scheme, and to improve the transparency around brokerage costs. Load controllers were also included within the scope of the call for evidence. The government issued a consultation in July 2022, which set out a broad overview of how the government intends to establish a proportionate and flexible licensing framework for organisations providing demand side response to domestic and small non-domestic consumers. It also sets out proposals to bring organisations providing large load control services into the scope of cyber security regulations.