Third Party Intermediaries: what your microbusiness needs to know
If your business has fewer than 10 employees or their full-time equivalent and has an annual turnover or balance sheet total of not more than £2 million it is classed as a microbusiness.
Your business is also a microbusiness if it does not have the above but uses no more than 100,000 kilowatt hours (kWh) of electricity per year or 293,000 kilowatt hours (kWh) of gas per year.
When we refer to Third party intermediaries (TPIs) we are referring to organisations or individuals that give energy-related advice, aimed at helping you to buy energy and/or manage your energy needs. TPIs include switching sites, energy brokers and any company that offers support with energy procurement. Whether you approach a TPI directly or they contact you, you should not feel under pressure to use their services. Your energy supply contract will always be with an energy supplier: the TPI does not supply your energy.
A TPI can support you when getting a business energy quotation as the process is different from getting a quotation for your home.
- There are very few published prices in the business market and you need to contact suppliers to obtain a quotation.
- There is no obligation for a supplier to supply you – a supplier may determine which customers they choose to supply by factors such as size of supply or your credit rating.
- There is no cooling-off period after you agree the contract (even when this agreement is made over the telephone rather than in writing).
- An agreed contract may last for multiple years and may have an early termination fee if you wish to change supplier before then.
Important questions to ask a TPI before you consider using their services:
- Which suppliers will you be approaching to get prices?
- How many price offers will you give me?
- What will you do to help me switch supplier?
- What services will you provide during the life of the contract?
- How will I be charged for these services? Will I be charged directly or indirectly?
Paying for a TPI’s services
A TPI will charge for the services it provides you. This could be a direct charge paid by you to them (eg a flat fee, a charge per trade made on your behalf) or indirectly. For indirect payments, the TPI receives a payment from the supplier, which is added to your bill.
Suppliers and brokers must ensure that consumers are fully informed about the nature and costs associated with a contract they are being offered. Information on TPI costs that will be included in the bill the supplier sends you must be provided to all businesses via the Principal Terms and upon request.
As the commission fees are based upon consumption figures, in the event that a customer consumes more energy than was estimated they will be liable for paying for their actual consumption. Customers, suppliers and brokers should ensure estimates are as accurate as possible to ensure estimated costs are reflective of actual costs
If a broker/TPI is paid directly by the business rather than via third party costs added to a customer’s bill by the supplier, they do not need to be declared in the principal terms provided by the supplier.
Please note that suppliers internal sales teams do not have to disclose commissions fees. This is because brokers perform a different service to a supplier and offer a range of services to the consumer for which customers are paying. A consumer would expect that a supplier’s charges would be a total of all their costs, including that of any sales staff. However, our research has shown that it is not always clear to a consumer that the prices they are quoted include broker commissions, and what portion of the prices they are quoted goes to the broker, and what are for the supply of energy. Hence the need to clarify the split of payments in the principal terms.
We have been alerted that scammers are claiming that Ofgem has made energy brokers repay the cost of undisclosed broker / TPI commissions paid on previous bills.
Ofgem do not regulate energy brokers and, as such, have no legal power to require energy brokers to repay commissions.
You may be able to claim back the cost of previous undisclosed broker / TPI commissions through litigation. Please ensure that you seek independent legal advice.
Consumer Protection
TPIs must comply with consumer protection laws, including those which relate to business customers. For example, a TPI is prohibited by the Business Protection from Misleading Marketing Regulations (BPMMRs) from carrying out misleading advertising activities and should therefore always identify themself and be clear about the purpose of their call. In November 2013, Ofgem acquired powers to apply to courts for an injunction to prevent breaches of the BPMMRs.
In instances where breaches of the BPMMRs may be criminal offences (which can be enforced by Trading Standards and The CMA) Ofgem may notify these enforcers of concerns, where appropriate. Ofgem does not license TPIs but has set out voluntary principles showing how they should operate, below.
Ofgem does not license TPIs but has set out voluntary principles showing how they should operate, below:
Principle
Example of TPI behaviour
A. Honesty
You should identify yourself, the services being offered and any organisations you represent (directly and indirectly) clearly at the start of any interaction with a customer and obtain their consent before any marketing
B. Respect
You must at all times respect the consumer’s wishes and should cease the current contact and avoid future contact if the customer requests
C. Accuracy
You should make the customer aware of how much of the market you searched to obtain the offers you propose to them and ensure all offers are accurately presented
D. Transparency
Before obtaining their agreement to the contract, you should make the customer aware of all principal terms of the energy contract, including the services you provide and how the customer will pay (directly or indirectly) for those services
E. Customer-focused
You should record and investigate all complaints fully and act quickly to put things right when you make a mistake
F. Professionalism
You should ensure staff are adequately trained for dealing with customers and adhere to these principles
Frequently Asked Questions
No. Some TPIs research the whole market but others represent one or a small group of suppliers.
No, TPIs are not necessarily required to find the best deal for you. You could find a better deal if you are prepared to look at different contract lengths or payment methods.
Yes, your verbal agreement is binding.
No, make sure you understand the services they will provide for you, how they will be paid for these services and all terms and conditions before you accept.
No. Some factors in energy bills may change during the life of the contract (eg environmental tariffs). These may be presented on a pass-through basis (where they will be added to the energy price when the charges are known by the suppliers). Check that you understand whether your price may vary within the term of the contract.
No. Many contracts are fixed term and you should be clear how long you would be locked into the contract and whether there is a termination fee.
Advice and support
What to do if you are not satisfied with a TPI
In the first instance you should contact your TPI and attempt to resolve the issue with them.
If you are a Micro or Small Business your broker should be signed up to an alternative redress scheme, also known as a Qualifying Dispute Settlement Scheme (QDSS). A QDSS offers independent dispute resolution and works with brokers and businesses to offer impartial resolutions. Check with your broker which scheme they are registered with before raising your complaint. Your supplier should also be able to tell you which scheme your broker is registered to. We are unable to approve these schemes.
Useful contacts
Micro and Small business consumers can also get help and advice from Citizens Advice free of charge.
- Citizens Advice Consumer Helpline: 0808 223 1133
- To contact a Welsh speaking advisor: 0808 223 1144
- For textphone, dial 18001 followed by the helpline number
- Or use the online webchat 9am to 5pm.
For public enquiries contact:
- Consumer Affairs team tel: 020 7901 7295
- email: consumeraffairs@ofgem.gov.uk