The lack of regulation of third-party intermediaries (TPIs) such as autoswitching services is leaving customers with “serious problems”, according to Citizens Advice.
A total of 7 million people used a third-party service to compare or switch their energy supplier in 2019 and this figure is expected to rise as the UK moves towards net zero emissions by 2050.
The charity’s Stuck in the Middle report published today (3 March) highlights how there is currently no direct regulatory oversight of energy TPIs, which also include energy brokers and bill splitting services, meaning consumers can struggle to resolve problems when they arise.
The report found that some autoswitchers were providing inaccurate or unclear information, making it difficult for consumers to make informed choices about using the service. Some sites even listed suppliers which were no longer in business.
It added that fewer than 15 out of around 70 energy suppliers are being offered by some autoswitching services claiming to cover the entire market.
Other issues highlighted by the charity were:
- Autoswitchers failing to cancel a switch, leaving customers stuck with a supplier they are unhappy with or facing exit fees
- Bill splitting companies failing to pass on communications from suppliers, leaving people in unexpected debt
- Consumers in vulnerable situations losing some of the services they rely on as a result of being switched without warning
It highlights how TPIs in other sectors such as in financial services, have better protections than in the energy sector.
For example, TPIs operating in insurance and other financial services sectors are regulated by the Financial Conduct Authority (FCA) meaning complaints can be resolved via an ombudsman. Furthermore, firms are required to treat their customers fairly and vulnerable customers have more protections.
The charity is calling for the same approach to be overseen by Ofgem and applied to the energy sector. It is also calling on the government to introduce a “proportionate and flexible regulatory approach for TPIs” in the forthcoming energy white paper.
In response to the report an Ofgem spokesperson said: “We welcome Citizens Advice’s report. We particularly welcome any government proposals to increase regulators’ powers to enforce consumer protection law which would deter poor behaviour by companies in the retail energy market, including third party intermediaries such as autoswitchers.
“We want to see all companies in the retail energy market work hard to ensure they are meeting customers’ needs. We want consumers to be confident in engaging in the energy market no matter which platforms they use to do so.”
Ed Dodman, director of regulatory affairs at the Energy Ombudsman, said: “This is a timely piece of research from Citizens Advice that shines a light on the problems that some energy consumers experience when using unregulated third-party intermediaries.
“As the ombudsman we think all consumers should be able to use our service if they have an unresolved complaint, no matter how they choose their energy deal and supplier.
“We are keen to work closely with the sector to find a way forward that ensures there is better protection for consumers and microbusinesses who use auto-switching services, price comparison websites, energy brokers and other third parties.”
Gillian Guy, chief executive of Citizens Advice, said: “The lack of regulation leaves people facing potentially serious problems and a lengthy and difficult path to resolving them.
“As more and more people use these sorts of services it’s essential that better safeguards for customers are put in place now.
“The government has an opportunity in the upcoming energy white paper to fix current problems and make sure the right consumer protections are in place as the UK moves to a zero-carbon future.”