Energy watchdog to launch review in a bid to protect businesses from abusive brokers
The UK’s energy regulator is to launch a review of the energy market for small businesses this year in a bid to stamp out abusive practices by brokers.
Ofgem said it will conduct a strategic review of the microbusiness retail market “to understand market challenges and consumer experience” and to identify actions it should take in the short and medium-term.
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Microbusinesses are those with fewer than 10 employees. They generally have very low energy usage and limited bargaining power in negotiations with energy suppliers.
The category includes 4.3m UK businesses that have no employees other than their owners, according to figures published by the Federation of Small Businesses (FSB).
The announcement follows the recent extension of Ofgem’s enforcement powers in relation to retail consumers and the introduction of a cap on domestic energy prices.
“It is important that we treat the smallest businesses as customers who require adequate protections like any other consumer,” said Mike Cherry, national chairman of the FSB.
“We need to see reform of an unbalanced energy market that has introduced price caps for consumers but has few protections for microbusinesses in often similar situations,” he added. “In addition to price interventions and increased transparency on tariffs, we are calling for proper regulation of energy brokers and their activities.”
In a statement, Ofgem said: “[We] support the government’s recent…proposal to extend consumer law fining powers to us so that domestic consumer protections are strengthened, and additionally propose that this is extended to non-domestic protections.
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As part of our consideration of more fundamental reforms to the retail market, we will carefully consider how the scope and form of our regulation may need to change.”
The watchdog said it will invite views and evidence from stakeholders as part of its review process.