Ofgem has unveiled plans to tackle unscrupulous energy brokers so millions of micro-businesses can get a better deal.

Two out of three micro-businesses use an energy broker when choosing their current energy contract and many of them benefit from the advice of a reputable broker. However, an Ofgem review found that in too many cases, microbusinesses are hampered by a lack of transparency when using brokerage services and end up being locked into poor value deals because they are not fully aware of what they are signing up to.

Ofgem found that a small number of micro-businesses were paying thousands more than they needed to in broker commission charges. These proposals will help all those using a broker to get value for money when using brokerage services.

The energy regulator says that the new proposals will make shopping around for an energy deal simpler, quicker, and fairer for micro-businesses.

The proposals would require suppliers to ensure that brokers they work with conduct themselves appropriately when interacting with customers and to make commission fees and key contract details clearer.

Where things go wrong, micro-businesses will be able to resolve disputes with energy brokers through an independent body. Micro-businesses will also find it easier to switch as administrative barriers are removed.

Philippa Pickford, Ofgem’s Director of Future Retail Markets, Consumers & Markets said “Providing greater transparency and tackling unscrupulous brokers will help microbusinesses get a better, fairer energy deal. This is more important than ever as microbusinesses emerge from the challenges posed by the Covid-19 pandemic.”

“These proposals are part of Ofgem’s wider work to improve the energy retail market through smart metering, extra support for vulnerable customers, plus faster and more reliable switching.”

Dame Gillian Guy, Chief Executive of Citizens Advice, said “The proposals announced today are good news for around 1.5m microbusinesses. Our research showed how the actions of unscrupulous brokers can lead to microbusinesses paying more than they need to, being aggressively pursued for debts and being needlessly disconnected.”

“Cooling-off periods, brokers being part of alternative dispute resolution processes and other measures would provide microbusinesses with significantly improved protections.”

“Microbusinesses are diverse and range from pubs and convenience stores to sole traders like photographers and many will have been hit hard by the Covid-19 pandemic. As well as these changes, Ofgem must make sure microbusinesses struggling with debts are treated fairly by suppliers in the months ahead.”