Microbusiness customers to get better energy deals

2 Jun 2021 10:25 AM

Ofgem, the energy regulator, has set out final proposals to help millions of microbusiness customers get a better energy deal (1).  

Energy brokers help busy microbusinesses to compare the market and find a better deal on their energy. But Ofgem found a minority of brokers engage in poor practices with opaque fees for brokerage services. In one case, 50% of the total contract cost (around £24,000) comprised broker commission fees that the consumer was not made aware of pre-contract (2). 

Ofgem’s package of support would mean that information on broker commissions is clearer for customers, and would introduce a 14-day cooling-off period for new deals. 

Microbusiness customers would also get access to an independent dispute resolution service if things go wrong. 

Ofgem will work with Citizens Advice so microbusinesses know their consumer rights and how the business energy market works. (4). 

These measures would take effect from later in 2021 following this consultation. In the meantime, Ofgem is urging microbusinesses to shop around for the best deal. 

Ofgem’s Interim Director of Retail Anna Rossington said:  

“With the impacts of the pandemic still being felt by many microbusinesses, it’s even more important to listen to the challenges these customers are facing in shopping around for their energy. 

Ofgem’s proposals will crack down on poor practice and empower microbusiness customers by making it easier for them to get a better deal.   

We are also sending out a clear signal to industry about the high standards we expect.” 

Contact Information

Michael Anderson, Media & External Relations Manager, Ofgem.
Tel: 020 7901 7079
Email: Michael.anderson@ofgem.gov.uk

Notes to editors

1: Microbusiness Strategic Review: Statutory Consultation to modify the SLCs of all gas and electricity supply licences. Microbusinesses play a central role in the UK economy, providing a wide range of products and services. Latest government data suggests that there were over 5.7 million microbusinesses in the UK by 2020, accounting for 96% of all businesses, 33% of employment and 21% of turnover. Microbusinesses make up a significant proportion of energy expenditure too, with expenditure from all these meter points accounting for £3.4bn in 2020. 

2: Brokers typically acquire commission for their services via charges included in the consumer’s supply contract. We have found that opacity around these fees and other poor practices by a minority of brokers is leading to some microbusinesses ending up on poor value deals. As one example, we identified a case involving a large microbusiness where 50% of the total contract cost (an estimated £24,000) consisted of broker commission fees that the consumer was not made aware of pre-contract.  

3: In December 2020, the UK Government’s Energy White Paper committed to helping consumers get a fairer deal, including ensuring that the retail market regulatory framework covers third parties such as energy brokers and price comparison websites. Ofgem supports this commitment and has adapted this package of reforms to account for BEIS work in this area.  

4: The specific measures include: 

5: UK Government: Department of Business, Energy & Industrial Strategy (BEIS): Energy White Paper: December 2020

Further Information

General enquiries (non-media)

If you are an energy customer looking for help and advice, including complaints about energy firms, please see our Household gas and electricity guide. Citizens Advice also provide a free, impartial helpline service across a range of issues on 0808 223 1133.

We also regularly share news and post general advice to help consumers get the most out of their energy services via our @Ofgem twitter and Facebook pages. If you have an enquiry or complaint relating to Ofgem’s policies or functions, contact us at consumeraffairs@ofgem.gov.uk or on 020 7901 7295.

For all other non-media related enquiries, please visit our Contact us page.

About Ofgem

Ofgem is Britain’s independent energy regulator. Our role is to protect consumers now and in the future by working to deliver a greener, fairer energy system. We do this by:

For facts, figures and information about Ofgem’s work, see Energy facts and figures or visit the Ofgem Data Portal.