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Mircobusinesses to get fairer energy deals, Ofgem unveils

Ofgem plans to tackle energy brokers taking advantage of small businesses.

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By Matt Maynard · 29th July 2020

Ofgem has revealed that it plans to tackle energy brokers, so millions of microbusinesses can get a fairer energy deal.  

If you own a small business, your days of being hampered by unscrupulous energy brokers could be over. An Ofgem review revealed that microbusinesses were hindered by hidden agendas when dealing with energy brokers, locking them into poor value-for-money energy deals.  

As small business owners, you could end up saving thousands, which is the estimated sum of money microbusinesses are overpaying a year in broker commission charges, according to Ofgem.  

Ofgem’s plans mean energy brokers will have to make commission fees and key contract details much clearer when interacting with microbusinesses. Ofgem’s proposal will make shopping around for energy deals a much fairer and simpler experience for microbusinesses.  

To give you an example of the unethical practices some energy brokers are guilty of, a Business Energy Claims (BEC) case study revealed the experience of a particular golf club. The broker said it would search the entire market for the best deal, but only offered one. This particular deal had a hidden commission of 50% of the golf club's energy spend. BEC estimate the golf club now owes £24,000 in ‘hidden’ commission charges. 

Ofgem has stepped in to make sure this does not become a regular occurrence, to protect people who own small businesses, and to ensure energy brokers remain transparent throughout their transactions. Microbusinesses will also find it easier to switch between energy suppliers, as administrative barriers are to be 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.”

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