Ofgem unveils plans to crackdown on energy suppliers

Energy watchdog Ofgem has unveiled plans to reform the UK's energy market, in a bid provide businesses with provide greater protection and help them change supplier more easily.

Announced earlier today (November 21), Ofgem’s proposals aim to make it easier for businesses to switch suppliers and looks to put an end to practices that often sees firms being automatically rolled over into new fixed-term contracts without their permission.

Ofgem said it would also be actively considering enforcement action against suppliers that fail to “play it straight” with companies that are trying to change supplier by misusing their supplier powers to block the switch.

Just last month (October 14), Ofgem announced a series of measures to encourage more competition among energy suppliers, while also simplifying tariffs to give consumers a clearer picture. 

As part of its recent pledge, which forms part of its overhaul of the entire energy market, Ofgen said it is looking to introduce new enforcement standards of conduct into supplier’s licenses, which will enable the regulator to impose financial penalties if breached.

Other key proposals include; an extension of the existing license conditions for micro firms to cover other small firms with less than 50 employees and the introduction of a range of reforms that better protect businesses from unfair sales tactics.

Watchdog Consumer Focus director of energy Audrey Gallacher, welcomed Ofgem’s plans but warned that “suppliers must go beyond the requirements outlined by Ofgem to provide their customers with better information and be more transparent with energy prices. Small businesses often lose out on the best energy deals because of lack of comparable information and the ways some brokers work when they negotiate contracts with energy suppliers.

Although, the Forum of Private Business (FPB) welcomed the move it warned that proposals to protect smaller firms could be undermined because of a lack of a dedicated watchdog. It has also called for financial penalties to be large enough to act as a deterrent.

Commenting on the proposals, FPB senior policy advisor Alex Jackman, said: “Ofgem clearly recognises our members’ concerns – that the behaviour of energy companies towards their small business customers is all too often unfair and unjust, so these proposed reforms are certainly welcome, particularly addressing misselling and extending the protections against rollover contracts enjoyed by micro businesses to all SMEs.

“But we are concerned that the imminent demise of Consumer Focus, following the closure of its predecessor Energywatch, could leave small firms without a dedicated watchdog.”

Ofgem currently has no powers to regulate energy brokers and is planning on asking government for new powers to help it take action against misleading brokers.

Ofgem chief executive Alistair Buchanan, said: “Ofgem is now proposing a series of reforms to ensure that business customers get a better deal from their energy supplier and greater protection for those using energy brokers. This will greatly increase the protection for businesses, especially for smaller firms. As we have demonstrated in the domestic market, we will also take a tough line on any suppliers we find systematically breaching rules designed to protect businesses.”

The deadline for comment on the proposals is February 15. Ofgem said it hopes to introduce accreditation for third party Codes of Practice as soon after the deadline as possible.

Carys Matthews

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