Households and businesses are to receive stronger protection against energy firms under plans to strengthen the industry ombudsman.
Customers will be given better and faster help with resolving disputes with their supplier, alongside a crackdown on energy brokers to stamp out exploitation, and protections for businesses when they install a smart meter, the Department for Energy Security and Net Zero (DESNZ) said.
The plans include halving the waiting period from eight to four weeks before consumers can escalate their complaints to the ombudsman and forcing suppliers to pay compensation if they do not implement rulings quickly enough.
The time the ombudsman considers complaints would also be cut from an average of six to four weeks.
Almost 10% of decisions handed down by the ombudsman are either implemented late or not enforced at all, the Government said.
New measures would also “stamp out” exploitation when dealing with energy brokers and price comparison sites, collectively known as third-party intermediaries.
A lack of regulation has allowed rogue brokers to use predatory sales tactics to take advantage of customers, selling them overpriced contracts in return for higher commission fees, DESNZ said.
New plans will also standardise contracts when businesses and public sector firms are required to install smart meters, providing up to almost £200 million in energy savings.
Energy Secretary Ed Miliband said: “For too long, parts of the energy market have been letting consumers down and not paying up when mistakes are made.
“Our reforms will put this right – making it faster and easier for families and small businesses alike to benefit from money back when things go wrong.
“We will also end the wild west of ‘cowboy’ brokers charging sky-high fees for contracts handed out to companies, while also providing better protections when installing a smart meter.”
Beth Martin, director for consumer protection and competition at Ofgem, said: “Energy brokers can help customers save money. But when any household or business is taken advantage of by a rogue energy broker, the reality is significant stress and financial strain that can have a real impact on their lives or the future of their company.
“We have listened closely to the concerns of businesses and already introduced a series of changes to the support they are provided. By extending our remit to cover third-party intermediaries, we will significantly strengthen those protections, and the protections for households, so we can better protect all customers and create a more secure energy market – offering businesses and households greater peace of mind.”
Tina McKenzie, policy chairwoman at the Federation of Small Businesses, said: “Tighter regulation of energy brokers is very much needed, so that small firms can be confident that they are getting the best possible deal, and so that honest brokers – who make up the majority – don’t have their reputation undermined by a small minority of dishonest operators.
“Small businesses need to be sure they are getting a true picture of the energy market, full information about contracts, a stop to pressure-selling tactics, and a wide choice of tariff options along with straightforward and disinterested advice from their brokers. We look forward to working with the Government to make the energy marketplace safer and easier for small firms to navigate.”
