Energy & Carbon Management, a UK energy consulting and broking firm says the industry faces a collapse in consumer confidence if ‘rogue’ energy brokers are able to continue to harass and tie organisations into crippling energy contracts which they can’t get out of.
The firm wants the Government to give it policing powers to tackle brokers who mis-sell energy products to businesses and make it hard for customers to switch to other suppliers through practices like automatic roll-over contracts. Ofgem currently has enforcement powers over energy suppliers but not over brokers.
If given the authority, Ofgem plans to root out the rogue operators by enforcing the Business Protection from Misleading Marketing Regulations – rules the Office of Fair Trading is currently responsible for implementing but rarely does. The energy regulator could also introduce a code of best practice and potentially ban automatic roll-over contracts for businesses with fewer than 10 employees.
“We welcome and fully support Ofgem’s proposals to root out these bad apples and we are calling on other energy broking firms to lend their support to this important campaign,” said Jon Henderson, managing director of Energy & Carbon Management. “These rogue operators need to be stopped. They are in the market for the short term to make ‘a quick buck’ and it’s giving our industry a bad name.”
Henderson believes there is a lack of understanding in the market – particularly among small businesses – about how these operators make their money. “They usually work on a commission basis for a particular group of energy suppliers but will claim to be independent with full access to the supplier market. High-pressure, cold-calling tactics are then used to broker deals for these suppliers favouring those who pay the highest commissions.”
Those most often targeted by rogue brokers are businesses taking on new leases.
“The usual strategy is to bombard the business with sales calls until they’ve signed them up to an expensive contract. The most vulnerable groups are small businesses which could potentially be wiped out if they are tied into a long-term energy contract they can’t afford,” says Jon Henderson who would also like to see Ofgem making supplier commissions transparent, banning verbal contracts and establishing a redress system which enables customers to take action against fraudulent selling. “We believe initiatives like these would go some way towards giving UK businesses more confidence in the energy broking industry and peace of mind that they are getting the best energy deals.”
The results of Ofgem’s consultation of industry stakeholders will be presented to Government later this year.
