Energy price comparison websites to be regulated in a bid to end 'scams'
Energy consumers minister Miatta Fahnbulleh has announced plans to regulate price comparison websites and energy brokers in efforts to stop their purported "licence to scam". She detailed a new framework intended to regulate third-party intermediaries (TPIs), aiming to eliminate hidden fees "and other unethical tactics".
A report released by Ofgem earlier this year highlighted instances where business stakeholders expressed "mis-selling concerns", such as being "locked into a contract at higher prices than they needed to be for multiple years, which can severely impact business viability".
Fahnbulleh stated: "Too many families and businesses, already struggling with the effects of the energy crisis, have fallen victim to poor practices by energy intermediaries. These unregulated third parties and rogue brokers have had licence to scam consumers without oversight or facing consequences. We will bring these intermediaries under control and put an end to hidden fees and other unethical tactics."
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She continued to elaborate on the aims of the proposed regulation: "A new regulatory framework, coupled with clear rules and standards, will restore trust and protect consumers while helping to build an energy market fit for the future one where these organisations help people save money through fairer practices and show them the best ways to reduce their carbon footprint."
On Friday, Fahnbulleh's department commenced a consultation targeting the regulation of TPIs, set to conclude in mid-November. The Government's proposal would make it mandatory for Third Party Intermediaries (TPIs) to provide transparent information on their fees and clarity over the terms of their contracts.
Ofgem's 2024 Non-Domestic Market Review Decision report highlights a significant issue, stating: "with the absence of formal sector regulation of TPIs, there is a protection gap for some energy consumers who engage with the energy market through TPIs".
It further noted: "In most cases, TPI service fees are paid as part of a consumer's energy bill from their supplier, with the supplier paying fees to the TPI from the payment they receive from the customer."
The report also pointed out: "This structure has led to some customers being unaware that they are paying a separate fee to the TPI and how much."