The Competition and Markets Authority (CMA) decision on energy market reforms is a big win for small businesses.
The Federation of Small Businesses (FSB) has campaigned tirelessly to bring more transparency to the market. Today’s decision should see businesses benefit from access to clear, comparable energy deals.
The move to publish comparable tariffs will make it easier for microbusinesses (which employ fewer than 10 people) and sole traders to quickly compare energy prices and choose the best contracts.
Until now, these firms have had to go through the time consuming process of negotiating complex deals with multiple providers. FSB is also delighted the CMA recommendations will bring an end to unfair auto-rollovers.
While many energy companies have voluntarily removed restrictive auto-rollovers, today’s decision will guarantee businesses are not automatically locked in to further fixed-term contracts, against their will, with unfair terms and conditions.
Gordon Millward, FSB Regional Chairman, said: “Today’s CMA decision is a big win for FSB and for small businesses up and down the country. Transparency and fairness should be at the heart of a functioning energy market for small firms.
“A third of small firms highlight the cost of energy as a barrier to the growth and success of their business – but if a business owner wants to seek out the best deal, they are having to spend countless hours negotiating complex, bespoke contracts with dozens of providers. These contract offers are often then difficult to compare on a like for like basis.
“Energy tariffs, published in a clear and comparable way, will make it much easier for small firms to secure a decent energy deal and empower them to make decisions that are right for them. Removing unfair terms and conditions from auto-rollovers will also ensure business owners are not caught off-guard when their contract expires.”
However, FSB is disappointed that the CMA has not addressed concerns around the regulation of third party intermediaries (TPIs). TPIs offer a valuable service to smaller firms, but some rogue TPIs are undermining the industry as a whole. TPIs need to be regulated so that businesses are not discouraged from using their services to gain more competitive energy deals.
The correction of this market failure now falls to energy regulator Ofgem. FSB will be fully supporting Ofgem as it works toward a code of practice for non-domestic TPIs.
“Third party intermediaries can be incredibly helpful to small businesses searching out fair energy deals. But there is a lack of trust in the industry, partly caused by some TPIs who cut corners or act unethically. This market failure must be addressed as soon as possible. FSB would like to see a regulatory framework for TPIs developed by Ofgem within the next year.
“There is still a huge amount of work to be done to turn CMA’s recommendations into a working reality. We look forward to continuing our work with Government, the regulator and energy suppliers to ensure these remedies are carried out.
“There is increasing pressure on Ofgem to cut costs, so FSB also seeks reassurances that it has the resources to implement all of CMA’s energy reforms in a timely manner.
“Bringing fair and transparent energy deals for the UK’s 5.4 million small firms will inevitably bring more jobs, increased revenue and improved productivity to the UK as a whole.”