Regulatory framework should “reflect and keep pace” with auto-switching and brokering services which are currently unregulated, a joint BEIS and Ofgem consultation has said.
The Flexible and Responsive Energy Markets consultation, released yesterday (23 July), said the ability of the current arrangements to provide consistent and appropriate protections is already tested by the growing role of price comparison, auto-switching and brokering services.
Ofgem does not currently regulate third parties such as energy brokers, however under Business Protection from Misleading Marketing Regulations (BPMMR), the regulator has powers to clamp down on organisations that are marketing energy products or services to business customers in a misleading way.
The report said: “Sectoral regulation treats these intermediaries very differently from suppliers – as no licences apply to these parties. This difference is already becoming blurred, as a switching service can now become the main link to the market in a consumer’s mind.
“And in the future this blurring may go further as, for example, we may ask our digital assistant to choose the best energy deal for us.
“The future energy retail market should ensure that consumers are appropriately protected no matter what energy related products and services they choose to sign up to in the future. Levels of sectoral protection should be proportionate to the risk posed to consumers.”
Welcoming the report, Tony Keeling, managing director of SSE Energy Services, said: “It’s very welcome that government and Ofgem are at last looking to create a level playing field – not only for different suppliers, but also for third parties like switching services.
“Fair and efficient markets are the best way to ensure innovation and help pave the way to net zero.
“Reforms should consider how to keep promoting competition rather than locking in long term regulatory price interventions.”