New Protections From Rogue Energy Brokers

21st September 2024

New government consultation will investigate introducing regulations for third-party services in the energy retail market to protect consumers and businesses.

Government to consult on plans for new protections for consumers and businesses from unregulated rogue energy brokers.
 
new regulations for third party services in the energy retail market will help consumers to get the best tariffs available, whilst promoting decarbonisation and clean energy.

proposals will enhance consumer protection, tackle hidden fees, foster market competition and innovation, and empower consumers to adopt low-carbon and energy-efficient tariffs.

Energy brokers and price comparison websites will be among those set to be held to account by a new regulatory regime, to provide better protections and save money for consumers and businesses.  

These new government proposals are a response to unacceptable instances of consumers and businesses being scammed by unregulated rogue brokers and other Third-Party Intermediaries (TPIs) in the energy retail market.

Many TPIs provide valuable services to consumers, helping them to shop around for the best deals and secure energy contracts which are best tailored to their needs.

However, examples of unethical behaviour have included adding hidden fees in exchange for their services or offering unsuitable contracts for customers' specific requirements - all in a market where their clients have little, or no, route for redress. 

The proposals published today seek to stop this practice by regulating the market, and aim to restore trust in these organisations. They would make it mandatory for TPIs to provide transparent information on their fees and clarity over the terms of their contracts to ensure consumers can make informed decisions on whether to sign on the dotted line. Universal standards of practice to prevent mis-selling and improve dispute resolution mechanisms would also be introduced to safeguard consumer rights. 

As well as helping families and businesses secure a fair deal, TPIs could also offer complementary services to empower consumers to reduce their carbon footprint by advising them on the best ways to improve their energy efficiency and cut carbon emissions - which in turn could also help bring down their bills. 

Minister for Energy Consumers Miatta Fahnbulleh said: 

Too many families and businesses, already struggling with the effects of the energy crisis, have fallen victim to poor practices by energy intermediaries. These unregulated third parties and rogue brokers have had license to scam consumers without oversight or facing consequences. 

We will bring these intermediaries under control and put an end to hidden fees and other unethical tactics.  

A new regulatory framework, coupled with clear rules and standards, will restore trust and protect consumers while helping to build an energy market fit for the future - one where these organisations help people save money through fairer practices and show them the best ways to reduce their carbon footprint.

Tina McKenzie, Policy Chair, Federation of Small Businesses (FSB), said:

We are very pleased to see that the government is proposing that energy brokers will be compelled to be more transparent about fees and contract terms, and that the complaint and dispute resolution process will be more robust.

The energy market can be very confusing to navigate for small firms, and many find brokers are helpful to find the best possible deal. However, this is not the case for all third-party intermediaries and there is widespread scepticism among small businesses as to whether they truly act in the small business customer's best interests. FSB has long called for tougher rules to crack down on questionable practices among a significant minority of third-party intermediaries, to make the energy market work better for small business consumers.

This will drive up confidence and create a fair and level playing field for small businesses as they get past the energy crisis and look to the future, with the right deal for them.

Taken together, the measures being proposed are all designed to protect consumers, but also raise standards and ensure fair competition in the energy market of the future. 

Subject to the consultation, a new regulatory regime will: 

put in place a coherent approach to regulation of TPIs
ensure fairness, equity and consumer empowerment in interactions with TPIs, enabling informed decision-making 
require price transparency for consumers within the TPI sector 
provide a suitable remedy for customer harm if it does occur 
accommodate both existing and future TPI business models whilst also being proportionate to the harm or risk of harm identified 
encourage innovation, measures that will contribute towards net zero, and fair market competition 
These measures and standards will also be future-proofed, enabling this relatively new market to continue evolving, and making use of new technologies such as artificial intelligence to deliver the best service, and savings, for consumers and businesses. 

See the consultation on Regulating Third-party intermediaries (TPIs) in the retail energy market.

TPIs in the retail energy sector can be broadly defined as a third-party that exists to help a consumer choose - such as comparison websites, energy brokers, and bill aggregators.

Ofgem's Non-Domestic Market Review in July 2023 highlighted problems with the TPI sector and suggested the need for government intervention to directly regulate TPIs.