The Energy Regulator gets ready to call time on energy brokers
Grip tightens on rogue brokers
Ofgem alarmed by brokers and propose new regulation. Most customers have no idea that energy brokers add an uplift (commission) to the prices that suppliers provide them. This is often excessive and can equate to as much as 30% of the overall bill
Ofgem alarmed by brokers and propose new regulation on how they can operate in the UK Market
There have been growing concerns, that many brokers are not being transparent about what they earn from customers and take excessive commission without your knowledge.
Because of this, Ofgem have just published their Micro Business Strategic Review consultation paper, outlining their proposed changes.
What are the proposed regulation changes?
- Broker conduct principle: Introducing a principles-based requirement for suppliers to ensure brokers they work with conduct themselves appropriately.
- Broker dispute resolution: Suppliers can only work with brokers signed up to a dispute resolution scheme.
- Informed contract choices: Applying targeted sales and marketing rules to suppliers and brokers they work with via supply licence changes.
- Broker commission transparency: Suppliers will need to provide information about broker commission payments on contracts, bills and account statements.
- Cooling-off period: Introducing a 14-day cooling-off period for microbusiness contracts.
- Contract extensions: Requiring suppliers to maintain existing contract rates for up to 30 days while issues with a blocked switch are being resolved.
- Banning notification requirements: Banning suppliers from requiring microbusinesses to provide notice of their intent to switch.
What does this mean for you?
Although these are proposed changes and are subject to consultation, it is almost certain to see transparency on broker commissions.
Suppliers will have to clearly show how much uplift brokers are are adding to their price.
This means you will know the commission you pay via your gas or electricity bill, hopefully putting a stop to excessive charges.
What do we make of the proposed changes?
Onwards Energy welcome this news as we operate with complete transparency and declare our uplift/commission on every deal.
It is without doubt that many customers are paying too much and we hope that this new legislation will put an end to excessive, unseen commission. Finally enabling customers to make informed decisions on who to partner with.
How to choose a good energy broker
If you have been using an energy broker and you don’t know how much you are paying, then we strongly suggest that you use a broker who declares their uplift/commission upfront.
Furthermore, don’t accept ‘it is paid directly by the supplier’ or ‘it is free’ as an answer. Always ask for the specific uplift that has been applied.