Consultation Overview:
The Department of Energy Security & Net Zero (DESNZ) has published its response to the consultation which assessed whether regulation was needed for Third-Party Intermediaries (TPIs) in the retail energy market. The central concerns to be addressed in the consultation were transparency, mis-selling of contracts, dispute resolution, vulnerable customers and customer service.
From the 85 responses received, DESNZ said that they overwhelmingly favoured regulation to create a more transparent and competitive sector. The reasons for the increase were said to be due to the ever-evolving TPI sector particularly over the last 5-years and the multiple shocks to energy markets, from the pandemic to conflict in Ukraine and the Middle-East. All these factors have increased volatility within the sector. As a result of this, the TPI sector has witnessed increasing consolidation, rise of digital-first TPIs, increasing role of claims management firms and AI-driven tools. Although some responses did acknowledge that long-standing issues such as adopting voluntary codes of practice had seen progress, the on-going concerns addressed in the consultation were very much viewed as issues that required legislative regulation.
Responses also endorsed the design principles outlined by the DESNZ, which would guide any regulation. These principles are:
- Transparency
- Treating Customers Fairly
- Dispute Resolution
The responses were, however, divided on their preferred model for regulation and there were also some varied views on the level of regulation required. No timescales were also provided by DESNZ meaning that the next steps remain up in the air, with the drafting of legislation and approval often being a drawn-out process.
LGE’s View:
LGE welcomes any policy changes and regulation that furthers clarity and transparency in the non-domestic sector and reinforces the need for TPIs to provide full visibility on fees, provide support for dispute resolution and improves customer service. LGE became one of the first TPIs to become an adopter of Ofgem’s proposals for transparency in 2014 and has long advocated more transparency in the TPI sector. All of LGE’s clients have full visibility on utility cost make-up and whilst many TPIs accept additional commissions from suppliers in exchange for exclusive relationships, the commission stated on LGE’s contracts is the only commission a client is charged.
LGE looks forward to seeing how the consultation develops and hopes to see the swift conclusion and implementation of any regulation that enhances consumer confidence in the TPI sector.
The full consultation document can be found here: Regulating Third-Party Intermediaries in the retail energy market: summary of consultation responses