Energy Retail Market: Strengthening Customer Protections

Today I am announcing Government plans to deliver stronger protections and a better deal for energy consumers. The Government are publishing our response to the consultation on third-party intermediaries and launching two new consultations on strengthening the Energy Ombudsman and standardising business energy contracts linked to smart meters. These plans will directly support working people, and the businesses that employ them, and drive forward the Government’s commitment to an energy market that puts consumers first.

The Government have listened to the voices of working people, small businesses and industry, keenly expressed in responses to our consultation and by Members of this House, including prominently by my hon. friend the member for Tamworth (Sarah Edwards).

I am proud to announce today that the Government intend to directly regulate third-party intermediaries, including energy brokers, by appointing Ofgem as regulator when parliamentary time allows.

Many energy brokers, price comparison services and other TPIs provide a good faith and good value service to their customers. But throughout the consultation and more widely, consumers, suppliers and others have provided evidence that confidence in the business energy market, and energy brokers in particular, has been undermined by a subset of unethical and exploitative rogue actors. This minority of rogue brokers have used dubious sales tactics, biased and misleading information, and deceptive commission payments to profit from charities and small business who just wanted a fair deal on their energy contracts.

That is why the Government are taking decisive action, introducing direct regulation of this market, moving to appoint Ofgem to create additional protections and fighting to get a better deal for energy consumers. Regulation will support good faith TPIs by clearing out bad actors and creating an even playing field that rewards quality services and enables pro-consumer innovation.

The Government’s decision to regulate this market will ultimately give consumers confidence that TPIs are acting in their best interests and enabling them to benefit from the smart, secure and sustainable energy system of the future.

In addition to TPI regulation, the Government are also protecting small businesses through proposals in our consultation published today on business energy contracts linked to smart meters. These new regulations would standardise the use of fixed-term energy contracts that require businesses to install smart meters, in response to the increasing use of these contracts by energy suppliers. From 2027, suppliers will need to co-ordinate the roll-out of these contracts and follow a legally binding customer protection code. Through these rules, the Government will ensure that these contracts are implemented fairly and consistently across the non-domestic energy market.

Smart meters bring significant benefits to non-domestic consumers, helping them to better manage their energy use and save money on their bills, giving them access to more innovative tariffs, and removing the need for manual meter readings and estimated billing. The consultation announced today will ensure that businesses are better protected and know what to expect when moving to a contract that requires a smart meter.

In addition to these measures, which focus on protecting small businesses, the Government are seeking to increase protections for all consumers in the energy market. Today I am also able to announce a third set of proposals that would improve protections for households as well as small businesses.

The Government want to eliminate bad practice and prevent problems arising, but when things do go wrong, we want consumers to have access to faster, fairer and easier redress. That is why we are planning to strengthen the Energy Ombudsman, ensuring that when it rules in a consumer’s favour, that decision is implemented and things are quickly put right.

The Energy Ombudsman’s dispute resolution service is available to all households and small businesses as an alternative to legal action to resolve consumer complaints against energy suppliers, heat networks providers and some energy brokers.

The Government’s plans would legally require suppliers to comply with the ombudsman’s rulings. Further, where a company has not implemented a decision on time and in full, the ombudsman would be given the power to order companies to compensate their customers. With these proposals, consumers will be able to trust that when the ombudsman rules in their favour, their supplier must act.

The proposals would also speed up the process for consumers receiving redress. We are proposing to halve the time before issues can be escalated to the ombudsman from eight weeks to four, and to cut the time for a decision from the ombudsman from six weeks to four. Consumers would have access to a legally-binding decision as quickly as two months after their initial complaint, with the outcome implemented within a further month. This is a significant improvement on the four or five month wait that many consumers currently experience to have things put right.

Together these steps will prohibit anti-consumer practices, improve consumer access to redress if issues occur and take a substantial step towards an energy market that puts consumers first.

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