Suppliers must tell customers if their cheapest deal is marketed under a different brand
- Suppliers with white labels will have to inform customers of their cheapest tariff, whatever brand it is sold under
- New rules provide greater flexibility for white labels brands to operate in the retail energy market
Ofgem has recently set out final proposals for regulating suppliers who sell energy using white labels in the domestic energy market. From July, suppliers will have to be more transparent and tell customers what their cheapest tariff is regardless of the brand they use.
White labels are organisations that do not hold a supply licence, but instead work in partnership with a licensed supplier to offer gas and electricity using their own brands.
Under Ofgem regulations, suppliers already have to tell customers about their cheapest deal, but until now this rule hasn’t extended to white label tariffs. Ofgem wants to ensure that suppliers are clear with their customers about their cheapest tariffs, regardless of the brand they use to offer the tariff.
Under Ofgem’s final proposals, there are no limits to the number of white label partnerships suppliers can have. This will make it easier for new business models to enter the energy market while retaining the additional protection that Ofgem has put in place for consumers.
Rachel Fletcher, Ofgem senior partner, said: “Selling energy through white label brands has the potential to increase consumer choice and engage consumers to shop around through well-known brands. But it is important that consumers are given the complete picture about all their suppliers’ tariffs. That is why we are acting to reduce barriers to white labels entering the market and to ensure suppliers have to tell consumers what their cheapest deal is, whatever brand it is marketed under.”
Notes to editors
1. We are keeping the effectiveness of the Retail Market Review (RMR) under review and its impact is also being considered by the Competition and Markets Authority (CMA) in the context of its ongoing market investigation. These white label arrangements may be revised following either of these reviews.
2. Recently Ofgem has published the legal wording on the regulations to bring the reforms into force, following a call for evidence in March 2014 and a consultation in September 2014. Once the statutory consultation published recently is complete we intend to publish a decision. Subject to the consultation’s outcome, we expect the new regulations to come into force in July.
3. In August 2013 Ofgem created temporary arrangements for suppliers with pre-existing white labels, including temporary exemptions for white label tariffs from theRetail Market Review (RMR) rules. The document Ofgem publishes recently proposed regulatory arrangements that apply equally across suppliers, including those with new white label partnerships.
4. Ofgem’s final proposals for regulating white labels cover:
On tariffs: We propose to apply the tariff cap for each white label separately and not to set a limit on the number of white labels that a supplier can have. We also propose to allow white labels to differentiate themselves from their partner supplier in the other RMR tariff rules, including on discounts and bundles. This extends the current flexibility in the temporary arrangements to new white labels and it facilitates the benefits around consumer engagement and choice.
On information: We propose to require suppliers to tell their customers about their white label tariffs when they are the cheapest via the Cheapest Tariff Message (CTM). For white labels, we propose that the CTM includes the partner supplier’s tariffs, but not the tariffs of its other white labels. This supports transparency around the relationship between supplier and white label so that consumers are told what their cheapest deal is with their licenced supplier, whatever brand it is marketed under.
5. To help understand the impact of our proposals, the document Ofgem published recently also presents some pricing information of partner suppliers, white labels and large suppliers without white labels. When comparing tariffs, both price and non-price elements should be taken into account, such as customer service.
6. The temporary regulatory arrangements applied to the white label partnerships that have been in place since March 2013, when the rules were in the final stage of policy development. As of May 2014, these are the white label partnerships covered by the temporary regulations:
- British Gas with the white label Sainsbury’s Energy
- SSE with the white labels M&S Energy and Ebico
For further press information contact:
Claudia Cimino: 0203 263 2722
Kate Wilcox: 020 7901 7113
Chris Lock: 020 7901 7225
Out of hours media contact number: 07766 511470
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