Ofgem calls for more regulatory powers

Ofgem is calling on government to approve more powers to regulate third party intermediaries (TPIs) such as energy brokers as part of its review into the non-domestic retail market.

The energy regulator has published a series of documents outlining its proposals for the non-domestic sector, as well as a statutory consultation aimed at improving domestic customer service standards.

Previously Ofgem has introduced rules requiring suppliers securing microbusiness consumer contracts through brokers to only work with energy brokers who are part of a qualifying redress scheme. The regulator is now proposing to expand this licence condition to include all businesses.

Ofgem said that it was conscious its proposed licence changes fail to address wider issues raised about some TPI behaviour.

“At present, Ofgem does not regulate TPIs, meaning we are not able to intervene when TPIs do not meet the standards the non-domestic sector has a right to expect. We are therefore requesting that government consider implementing regulation of the TPI market, and we are offering our support to do this,” it said.

Other recommendations to government include expanding access to the Energy Ombudsman to all businesses and the regulator is also calling for further consideration for vulnerable domestic consumers on non-domestic contracts, such as people who live in care homes, social housing and in mobile home parks, who are at risk of missing out on protections.

As well as TPI dispute resolution, the regulator is also consulting on requiring suppliers to provide “timely responses” to complaints and “stepped-up reporting to Ofgem on complaint handling”. It is further proposing to widen the standards of conduct rules that currently only apply to microbusinesses.

Other proposals include increasing the transparency around TPI charges that are added to contracts for all business customers, not just microbusinesses.

Ofgem added that it will work with stakeholders to improve transparency in bills so consumers can better understand price changes and that it will seek views on whether to change the rules to require clearer signposting to Citizen’s Advice, as there is a concern that microbuisnesses are not always aware of the support available to them.

Finally, it is proposing to embed more specific guidance on deemed (default) rates to “drive up best practice”.

“Ofgem’s rules are clear that, because a customer cannot choose the terms of deemed rates, these rates must not be unduly onerous. After reviewing the variety of ways suppliers consider deemed contracted rates, we believe there will be benefit in providing some additional clarity to drive more consistency in how the rules are being interpreted,” it said.

If Ofgem goes ahead with the proposed changes, it plans on publishing a statutory consultation in the autumn. It expects any changes to be implemented in winter 2023.

Domestic consumer standards

Elsewhere, Ofgem has launched a statutory consultation on domestic consumer standards.

The regulator explained that there has been a decline in overall consumer satisfaction with customer service by domestic energy suppliers since 2018 and that as such, it is proposing new rules to improve standards.

Following a policy consultation in May this year, Ofgem is now consulting on improving contact ease for consumers. Its proposed guidance states that it expects suppliers to be open longer than standard working hours.

Other proposals include requiring suppliers be open for contact 24/7 for customers who have lost power or gas due to issues related to their supplier, as well as be available via different methods of contact that take into account customer needs.

“Alongside the proposed modified licence conditions, we are consulting on guidance on our expectations for domestic suppliers in relation to their new and existing licence requirements on contact ease. This includes our expectation that suppliers will be able to justify and explain their level of performance if it took significantly or consistently longer than five minutes on average to answer phone calls,” Ofgem added.

Ofgem stressed that it did not want suppliers to improve contact ease at the expense of overall customer satisfaction, such as by responding quickly to customers but not resolving their queries.

To this end it revealed its plans to work with industry to “develop a robust, Ofgem-approved overall measure of customer experience” which would be published regularly.

“This will allow us to better identify issues, help support competition and drive suppliers to improve their service,” it added.

Other licence changes proposed by the regulator include around identifying and supporting struggling customers.

These include proactively engaging customers to understand their ability and offer debt repayment plans at the earliest opportunity. Furthermore, suppliers would be required to consider payment holidays, when customers are unable to pay.

Additionally, the regulator is pushing ahead with a move to require energy suppliers to publish information on their customer service performance, as measured by the Citizens Advice quarterly star ratings table.

Ofgem is proposing to publish a decision on any licence changes by early October and for any licence changes to go live in December.

Commenting on the proposals the regulator’s director of delivery and schemes, Neil Lawrence, said: “Suppliers are short-changing too many of their customers, who deserve better.

“Customers need more support when they are struggling and should be able to contact their supplier without frustration or undue delay when they need help.

“The plans we are announcing put the welfare of business and domestic consumers first and set out a comprehensive package to tackle poor behaviour by energy suppliers.”