Source · Select Committees · Business and Trade Committee
Recommendation 37
37
Deferred
Paragraph: 152
We recommend that the Government brings forward regulation of third-party intermediaries.
Recommendation
We recommend that the Government brings forward regulation of third-party intermediaries. Regulations should ensure that third-party intermediaries encourage customers to switch not just on price, but also on customer service standards and other factors. The regulations should also ensure that third-party intermediaries are transparent about the services offered and the suppliers that they work with, provide an explanation of remuneration and access to advice and redress for customers. The regulations need to be future proofed for the significant role that third-party intermediaries are expected to play in the transition to net zero.
Government Response Summary
The government is considering responses to a call for evidence on third-party intermediaries and assessing the impact of recent market events, with next steps on the future of the retail market to be set out in due course.
Paragraph Reference:
152
Government Response
Deferred
HM Government
Deferred
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.