Thursday, 12 April 2012

UK #Ofgem set to crack down on #energybrokers

A lack of rigorous legislation governing the behavior of UK energy brokers has allowed some firms to engage in practices that are threatening to harm the reputation of the entire marketplace.

Between the industry authorities Ofgem and the Office of Fair Trading lies a grey area in which neither has any particular sway. This has been exploited by a small minority of energy brokers, which have used practices that leave small business customers disadvantaged. Legislation is needed to close the protection gap, but the problem facing the authorities is that the vast majority of firms act in the best interests of their customers, and therefore any new legislation should not have any effect on them.

Ofgem is attempting to solve this problem and prevent unscrupulous brokers from exploiting customers through practices including misrepresenting offers from suppliers, not being clear on the fee or commission that is being charged, or only negotiating with suppliers that offer the broker the best commission. Current proposals center on banning brokers from preventing customers contacting the supplier directly and making accreditation to an Ofgem-backed scheme compulsory.

So far so good, as any legitimate broker would certainly be able to comply with these regulations almost immediately. However, should the legislation go further?

The answer to this may lie with the energy suppliers, which have been accused in the past of being silent on the accounts that brokers deliver to them even when it is clear that the customer is not on the right tariff or deal.

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