Ofgem’s third-party intermediaries (TPIs) market review (HTML) | Consumer Scotland

Summary

Consumer Scotland welcomes Ofgem’s market review of Third-Party Intermediaries (TPIs) within the retail energy sector. This review can play an important role in strengthening the evidence base on TPIs, which is currently limited. Consumer Scotland will be commissioning its own research in 2026 on the experience of small businesses in Scotland when using energy brokers and consultants. We will be pleased to share the findings from the research with Ofgem. Building a shared understanding of the sector across different parties, now and as it evolves, will be essential to the design and implementation of effective regulation.

The direct regulation of TPIs is urgently required to address a persistent consumer protection gap. Regulation can also make an important contribution to meeting wider policy ambitions and ensuring positive consumer outcomes around clean power, flexibility and bill reduction.

As Ofgem moves towards a more consumer-outcomes based approach to regulation, there is an opportunity to apply this approach to TPI regulation. Such an approach can help to tackle poor practice in the sector which has meant consumers not receiving fair value, being unable to make informed choices, dealing with products and services that are not reliable or performing as intended and left feeling that their concerns and complaints are not being addressed fairly, effectively and promptly. All of which have been evidenced through research and data from work undertaken by UK Government, Ofgem, Citizens Advice, Consumer Scotland, Advice Direct Scotland (ADS) (case data described directly later in this response) and the Energy Ombudsman amongst others and are set out in more detail throughout this response. [1],[2], [3],[4], [5]

Consumer Scotland recommends that Ofgem focuses on the following priorities in its work to design and implement new TPI regulations:

A flexible and agile regulation framework, able to respond to an evolving retail energy market and support delivery of wider sustainability, flexibility and bill reduction ambitions.
A risk-based approach to authorisation in which the levels of scrutiny of market entrants are proportional to the control they anticipate having over consumer-decision making and the level of potential impacts on consumers’ lives as a result of those decisions.
Regulation that supports, promotes and meets the needs of vulnerable consumers.
A consumer-outcomes driven approach that ensures TPI regulation is a) consistent with other areas of regulation including supplier licence conditions and the Smart Secure Electricity Systems programme and b) accompanied by strengthened consumer protections, particularly for small businesses.
A framework that supports strong and swift enforcement including sufficiently high levels of authorisation fees and penalties to resource action and deter bad practice.
A framework that includes appropriate mechanisms to encourage and embed best practice.
A monitoring and reporting system that allows Ofgem to understand the evolving state of the market, identify systemic issues and assess how regulation needs to adapt and evolve.

Response

1. What barriers to entry are there for new TPIs to enter the sector?

a) How do they vary by TPI type?

b) What effect do you think these have on the sector and consumers?

TPIs can play an important role in supporting households and small businesses to secure the energy they need at a price they can afford, particularly as the range of tariffs and products in the retail energy market expands. The UK Government estimates that there are around 2,200 brokers operating in the non-domestic retail energy market alone, suggesting that there are few barriers to entry for TPIs wishing to operate in this market.

In recent years some limited conditions that could affect entry into the sector have been imposed, albeit indirectly via suppliers. In 2024 Ofgem decided to require all suppliers to ensure that any TPIs they worked with were registered with a Qualifying Dispute Settlement Scheme (QDSS) in order for small businesses to seek redress and to give details of third-party costs in non-domestic contracts, providing transparency where suppliers were paying TPIs to promote certain deals.[6]

While these were welcome steps forward, evidence underscores the need for more direct regulation of the sector to ensure the best outcomes for consumers. Consumer Scotland’s 2025 small business survey research highlights that small businesses in Scotland using TPIs in the energy market are relatively more dissatisfied with their services than those using TPI services in other markets such as financial services and telecoms.[7] In addition, data from the advice line energyadvice.scot advice, which is provided by Advice Direct Scotland (ADS) using funding obtained from Consumer Scotland, suggests that small businesses continue to experience problems around billing, pricing and contractual arrangements. Looking ahead, Consumer Scotland will be commissioning qualitative research to gain a deeper understanding of how small businesses in Scotland experience some of these challenges, as well as their levels of satisfaction more generally and the motivations behind their use of energy brokers and consultants.

More broadly, we would highlight the importance of consumers being able to use TPIs with confidence, given the critical role TPIs can play in managing households’ and small business’ essential energy services and the levels of control over consumers’ decision-making they exercise in some cases. Poor consumer experience of TPIs risks undermining trust in the sector and the retail energy market more generally, with negative consequences for TPIs, suppliers and consumers alike, presenting risks to the realisation of wider policy ambitions and improved consumer outcomes around consumer-led flexibility and reduced energy bills.

In this context, our assessment is that the conditions to entry for TPIs are currently insufficient. Proposals to strengthen regulation in this area are welcome and should be implemented as soon as possible to address the existing consumer protection gap.[8]

2. What features of the TPI sector do you think help support effective competition and good outcomes in the sector?

a) What areas of the TPI sector do you think could be improved?

Consumer Scotland’s own work over the last year has identified that there are important lessons and insights to be drawn and explored further in relation to the experiences of small businesses in using TPIs.

While our small business research highlighted relatively higher levels of dissatisfaction amongst small businesses in Scotland when using TPIs and brokers in the energy market compared to other markets, at the same time it also finds that the large majority (77%) of small businesses respondents in Scotland using a TPI to secure energy goods and services were satisfied with the service they received.[9] This reflects Ofgem’s 2024 non-domestic research in which the significant majority of microbusiness respondents (71%) and small business respondents (82%) reported being satisfied with their use of TPI services in the energy market.[10]

Regulation must enable the conditions to replicate and embed good practice as well as drive much-needed improvements in the sector. Consumer Scotland will this year undertake research into the consumer experiences of small businesses in Scotland using energy brokers and consultants. Through this work we will seek to identify new evidence of existing good practice in the sector, alongside further insights into how and where direct regulation can be designed and implemented to improve protections for small businesses.

In terms of improvements to be made, case data from the advice line energyadvice.scot shows small businesses highlighting problems around potential mis-selling and contracting of services by TPIs, as well as problems with billing. For example, in one case, a small business customer was told by an energy broker they could get a better deal with another electricity supplier. The small business agreed to change supplier, but when the first bill came through, the monthly direct debit was more than twice what they were quoted by the energy broker and more than 50% higher than they were paying every month to their previous supplier. In another case, the small business was billed unexpectedly large sums (tens of thousands of pounds) with significant negative impacts on the business, including around the payment of wages. The small business reported ongoing confusion and uncertainty around the accuracy of billing and meter reading and coordination between the TPI and the supplier.

These issues are similar to those commonly raised by microbusinesses contacting Citizens Advice Scotland’s Extra Help Unit (EHU). They are also reflected in recent Energy Ombudsman data from their broker dispute resolution scheme that finds the main sources of disputes between small businesses and brokers were misrepresentation of market coverage in sales, aggressive sales practices, differences in prices between quotes and contracts and lack of transparency around contract terms.[11]

Action to tackle bad practice in the TPI sector should be accompanied by wider efforts to build small businesses’ trust and confidence in the non-domestic retail energy market more broadly. In Consumer Scotland’s small business survey, 20% of Scottish small businesses reported being dissatisfied with goods and services purchased in the energy market compared to 11% in the water sector, 5% in the postal sector and 4% in the financial services market. Of those businesses using energy goods and services, 45% felt that they did not pay a fair and reasonable price for them and 31% did not feel that their terms and conditions were fair.[12] Citizens Advice research found that while small businesses report positive experiences of the non-domestic retail energy market, these are shaped by low expectations on the part of businesses.[13]

Organisations such as the Federation of Small Businesses and the British Retail Consortium have also voiced concerns about small businesses capacity to interact with energy markets, the lack of transparency around deals they are being offered and the limited nature of protections for business consumers in comparison to households.[14] Small businesses’ low expectations and/or low awareness of the retail energy market, combined with fewer consumer protections, may risk increasing their exposure to poor practices of both suppliers and TPIs, with negative impacts for their businesses and the wider economy.

In the Energy Ombudsman’s survey of brokers, brokers themselves identified that they wanted “clear, standardised rules applied fairly across brokers and suppliers, with action on misleading practice.” As Ofgem moves towards a more outcomes-based approach towards regulation there is a real opportunity to provide this consistency and drive-up small business consumer confidence and experiences of the TPI sector and non-domestic retail energy market.

3. On what basis do TPIs typically compete? (e.g. price, customer service, access to suppliers, trust).

a) Please explain how important each factor is relative to one another.

Not answered.

4. Why would a TPI exit the industry? Please share any recent examples you want to highlight and what happens to consumers/suppliers/data and payments when an exit does occur. We are interested in voluntary exits, exits due to insolvency and acquisitions.

Not answered.

5. How do customers currently assess the quality and trustworthiness of a TPI before engaging with them?

a) Is there any information that would better help consumers identify good quality TPIs?

Our response to this section focuses on the latter part of this question, regarding information that would help consumers identify good quality TPIs.

In our assessment there are a number of types of information that will be important for consumers in this market:

Public information on authorised TPIs: Details of all authorised TPIs should be made publicly available in a register similar to the financial services register managed by the Financial Conduct Authority (FCA). Authorised TPIs should also be required to display details of their registration on their websites.

Contracting: Clear information around contracting processes for small businesses engaging via energy brokers and consultants in the non-domestic retail energy market is vital. Case data from the advice line energyadvice.scot and EHU suggests that problems continue to arise around the verbal contracting process, with businesses unclear on the terms and conditions of contracts being proposed to them, that verbal agreements are binding, and finding themselves switched to contracts which are unsuitable and/or more expensive. Consumer Scotland’s planned research may offer insights into specific contracting challenges that arise when brokers and consultants initiate contact with small business consumers to offer them deals e.g. through cold calling, rather than small businesses proactively seeking out broker services.

Alongside direct regulation of TPIs, there is an opportunity to align consumer protections arrangements more closely with the domestic retail energy market, through ending verbally binding agreements and establishing the requirement for cooling-off periods.

Performance reporting: As TPI regulation is established, it will be important to consider how TPIs’ performance is monitored and reported on and shared with consumers in order to inform their decisions about procuring the services of TPIs. Ofgem’s seven new consumer outcomes provide a framing for this, and should inform the types of data (e.g., on pricing, billing, debt measures and plans, complaints cases and complaint handling, customer service and information, switching numbers and processes, customer satisfaction etc.) that are collected both in relation to TPIs and non-domestic suppliers. Consumer Scotland would welcome the opportunity to inform how performance indicators are set and what types of data are collected, and how they are reported on.

In terms of the provision of good quality and accessible information on TPIs and how consumers can work with them, a multi-channel approach will be required. Consumer information and awareness building must be an integral part of the regulation implementation process, with lessons to be drawn from how UK Government, Ofgem, statutory advocacy bodies, industry and others have worked together to engage heat network consumers, as well as operators and suppliers, in the establishment of regulation in that sector. Key intermediaries such as advice bodies should have an important role in the provision of information

We also note that there is the potential for the TPI sector to expand rapidly as new products and tariffs become available in the retail energy market and artificial intelligence (AI) is increasingly used in the design and delivery of these products and services. Regulation and consumer information and awareness must keep pace with these developments, not least to ensure continued consumer confidence. In our previous response to UK Government’s consultation around their TPI regulation proposals, we suggested that regulatory sandboxes can allow for the development of new products and services under the oversight of the regulator. The provision of consumer information relating to new products and services should be considered as part of this process.[15]

Ultimately, direct regulation which includes a risk-based approach to authorisation with a particular focus on those TPIs with greatest control over consumer-decision making is vital to improving all consumers’ ability to assess, and have confidence in the quality and trustworthiness of TPIs operating the sector. Strong, clear, and swift enforcement will also be essential, to ensure consumer confidence in the system.

6. How effective is the current complaints handling process for consumers who use TPIs? a) Are any variances in the complaints handling process depending on the type of consumer (e.g. domestic, non-domestic including Small/Microbusinesses/Industrial and Commercial).

Overall, existing data from the advice line energyadvice.scot shows that that the number of cases being raised relating to TPIs is relatively small. With new TPI regulation set to be introduced the number of cases could increase, and the systems put in place to deal with these cases need to be effective across all consumer groups.

When things go wrong, both microbusinesses and small businesses can already access the Energy Ombudsman Broker Dispute Resolution scheme. It in its latest report on the scheme, the Energy Ombudsman reports that there has been a drop in the number of disputes being raised, an increase in brokers signposting the scheme and increase in the number of cases where remedies are being implemented on time.[16]

We note that complaints cases in the TPI sector can be complex given the number of actors involved and resolution. Resolving complaints needs to be made as easy as possible for consumers with clear rules, roles and responsibilities for both TPIs and suppliers, including signposting of appropriate advice and dispute resolution services. Again, the overarching framework for this needs to be provided by Ofgem’s seven consumer outcomes.

Recognition of the complexity of these cases regarding the services that advice bodies provide is also essential. In particular, there are many more TPIs compared to suppliers, which means it will be more challenging for advice services to build the type of established relationships with individual TPIs in the same way they have been able to with a more limited group of suppliers.

Statutory advocacy and advice bodies will need to work closely with the Energy Ombudsman and Ofgem to ensure adequate and sufficiently resourced services are in place to handle and monitor the types and levels of cases raised at every stage of the process. It will also be important to monitor and review the enforcement decisions relating to cases, not only to understand the efficacy of the process but also in relation to the effectiveness of penalties imposed.

New Consumer Scotland research will seek to strengthen the evidence base around the experiences of small business consumers using energy brokers and consultants and how complaints are handled when things go wrong. We will be pleased to share this evidence with Ofgem when it is available.

7. To what extent does the current sector encourage and reward high-quality, low cost advice?

As indicated in earlier responses, data shows that a majority of small business consumers report being satisfied with the services they receive from TPIs operating in the non-domestic retail energy market. This suggests that there is good practice within the sector and that needs to be encouraged and replicated through regulation. Looking at the role that existing voluntary codes of practice and industry standards and guidance operated by representative bodies such as the Utilities Intermediaries Association (UIA) has played will be important, and lessons learned from what has worked.

However, data from Consumer Scotland’s partner the advice line energyadvice.scot as well as data available through the Energy Ombudsman suggests the quality and cost of advice that consumers are receiving is not consistently of the standard it should be. TPI small business consumers report a range of issues including:

Aggressive selling practices
Lack of transparency around contracting terms, including use of verbal agreements
Differences in prices quoted and prices contracted
Issues with transparency and consistency around billing [17]

It will be important that direct regulation addresses these persistent problems and improves the ability of the sector to provide high-quality and low-cost advice to ensure better consumer outcomes.

8. Do TPIs face any barriers in assessing tariff, data, service or product suitability for their clients?

One key area in which Consumer Scotland has concerns is about the ability of TPIs to assess tariff, data, service or product suitability is in relation to consumers with vulnerabilities. We highlight this because it can be challenging to identify vulnerable consumers in the non-domestic energy retail market where many brokers and consultants currently operate. In some cases this is because they are the end users of energy rather than those arranging the contracts (e.g., those living in park homes where the manager or owner of the sites manages the energy supply and resells energy to residents) or are using the services provided by a small business using broker services (e.g., care home residents).[18] In these instances, potential risks and challenges emerge in relation to ensuring the types of goods and services that are being offered are appropriate and sufficient steps are being taken to avoid detriment and harm, both for the customer of the broker services and the end users of the energy or the goods and services being provided by that business.

There are a potentially relatively large number of domestic end-users of non-domestic energy contracts but whose visibility amongst UK Government, Ofgem and suppliers are low. As of 2023 and according to Age UK and DESNZ figures, 900,000 households were on non-domestic contracts. [19] Awareness of who and where these consumers are located, and any vulnerabilities they may have, is also likely to be low amongst TPIs, and Consumer Scotland would reiterate previous calls to UK Government and Ofgem to commit to strengthen data on this particular group of consumers.

It is also not clear what specific protections or support is available to consumers in vulnerable circumstances who are using TPIs to ensure they are able to make appropriate judgements about the suitability of services being offered to them.

For all these reasons, Consumer Scotland would welcome consideration by Ofgem of including a vulnerability principle into new TPI regulation and on how outcomes articulated in its Consumer Vulnerability Strategy are applied to TPIs operating in the sector. More broadly, work to establish a single, multi-sector register of consumers with vulnerabilities continues to be vital.[20] Clear, accessible information and advice is also essential in helping consumers to interact with the retail energy market more generally and engage the services of a TPI to secure the best deals when they feel appropriate.

9. How do you foresee the TPI sector evolving in the future? (e.g. via Market-Wide Half Hourly Settlement, flexible tariffs, digitalisation, artificial intelligence)

a) What impact will these changes have on competition and market entry?

The TPI sector is likely to evolve alongside the retail energy market as new tariffs, products and services come online, with the opportunity to support consumers to secure affordable and sustainable energy and allow them to flex their demand. Some of these products and services will mean greater control over consumer decision-making, for example in relation to the automation of services and technologies such as heat pumps. It is welcome then that the proposed regulation regime will be defined by TPIs business activities, rather than organisational business model, and new activities can be brought relatively easily into the scope of regulation.

In this context, a risk-based approach to authorisation will become even more important for consumer trust and confidence and overall good performance of the sector. Alignment and integration between TPI regulation, ensuring smart, secure electricity systems and the new consumer outcomes-based approach to regulation more generally will also be vital. Consumer Scotland is due to publish new research on consumer’s interactions with flexibility services later this year, which will provide further insights into how markets and consumer behaviour is evolving.

As highlighted in our previous response to UK Government’s consultation on its TPI regulation proposals, we identify a risk of AI driven TPIs interacting with each other in such a way to mirror pricing and artificially keep prices higher for consumers and businesses than would be the case without AI. This AI-driven interaction could be difficult to legislate or regulate for as models are not designed to be transparent and assessable by other bodies. Requirements for regular audit and assessment of any AI models used would be of benefit to building trust in the sector should AI models develop, and the regulator will require the necessary powers and skills to assess any models. AI could also increasingly drive the back-end operations of TPIs in the future, but this must not be at the expense of good consumer experiences and outcomes.[21]

10. Are there any consumer groups that face barriers to accessing the retail energy sector without using a TPI and what drives those barriers?

Small businesses face barriers in accessing the non-domestic retail energy market. Consumer Scotland’s research finds that of those small businesses reporting use of broker services, 30% had used these services in the energy market. This compared to 12% in the water and telecoms markets. Only use of brokers in the financial services market was higher at 67%. The research also highlights the negative experiences of small businesses in Scotland accessing the non-domestic retail energy market. Of those businesses using energy goods and services, 45% felt that they did not pay a fair and reasonable price for them and 31% did not feel that their terms and conditions were fair. Ofgem’s latest non-domestic research highlighted that brokers are often perceived as necessary for helping businesses to secure better rates and navigate the complex market and Citizens Advice research undertaken by Yonder found that brokers play an influential role in small businesses purchasing electricity and/or gas in the non-domestic retail energy market, helping them to understand and make decisions on their supply options, and which without the support of a broker would have been more challenging. [22],[23] Recent research from the Federation of Small Businesses (FSB) reports a significant drop in small business confidence, particularly in Scotland, with small businesses in Scotland experiencing increased running costs, and utility costs cited as one of the biggest drivers.[24]

Against this backdrop, TPIs can have an important role to play in helping time-poor small businesses to identify energy deals and support them in managing their energy. Consumer Scotland will be undertaking research to better understand the motivations of small businesses, including by sector, turnover and location, of using TPIs to help them navigate the energy market and we will be pleased to provide the findings from this work to Ofgem when these are available.

11. How do TPIs currently identify and support consumers in vulnerable situations?

a) When TPIs do identify vulnerable customers, does the supplier get provided with that information?

As highlighted in our response to Q8 and for the reasons articulated there, Consumer Scotland is concerned about the ability of TPIs to identify and support consumers in vulnerable situations, now and in the future.

With heat networks regulation, Ofgem have introduced a vulnerability principle within the standards of conduct applied to heat network operators and suppliers. In practice this means that those operators “must identify and understand the characteristics, circumstances and needs of vulnerable consumers to ensure that people in vulnerable situations being treated fairly.” [25] Consideration should be given to how an appropriate, similar, mechanism could be included in TPI regulation. Ofgem also needs to consider the data capturing and sharing requirements that can support better identification of vulnerable consumers across the TPI sector and wider retail energy market.

12. What factors should be considered when designing an authorisation process? In your response, please consider the authorisation fee, information requirements, and any potential unintended consequences. a) How might different approaches affect TPIs and the sector? Where appropriate, please provide examples from other sectors.

Overall, Consumer Scotland wants to see a risk-based authorisation process in which the levels of scrutiny of market entrants are proportional to the control they anticipate having over consumer-decision making and the level of potential impacts on consumers’ lives as a result of those decisions. The authorisation process needs to strike the right balance between protecting consumers and enabling and fostering innovation and growth in the TPI sector to deliver flexibility and sustainability outcomes for consumers. As it stands, a rebalancing in favour of consumer protection and aligned with Ofgem’s new consumer outcomes is required.

We are broadly supportive of the UK Government’s current proposals for the recovery of regulation costs via fees paid by TPIs and linking fee levels to revenues from regulated activity. Proposals have also been made to extend the ‘polluter pays’ principle from recovering the costs of ADR to supporting regulator investigation and possibly enforcement costs. We would broadly support this approach but would underline the need to ensure enforcement penalties are set at such a level as to deter bad behaviour.

Fees also need to be set at a suitable high level to prevent ‘phoenixing’ of TPIs i.e., where a new company emerges to continue the business activities of a previously failed and/or dissolved entity. Suitably rigorous monitoring of market entrants can also prevent this behaviour, and Ofgem needs to ensure that the details collected as part of the authorisation process are sufficient to underpin this process. Ofgem will also be able to request information from TPIs and to commission ‘skilled person’ reports on a particular aspect of a TPI’s business activities. Lessons can be drawn from guidance on information requirements provided by the FCA around financial services authorisation and in relation to regular data reporting guidance provided by Ofgem to heat network suppliers and operators.

Ofgem will also need to consider the implications of enforcement decisions on the consumer and any negative consequences these may have. For example, if a TPI’s authorisation is revoked, what implications will this have on how a customers’ data and relationship with a supplier continues to be managed.

13. Do you agree with our description of how the TPI market typically operates and the customer journey? Please provide any additional information or evidence that would aid our understanding, and highlight where risks of poor outcomes are greatest, including any differences based on types of consumers.

Ofgem’s characterisation of the TPI market, how it operates and customer journeys within it is fair. It would be useful if, following this review, Ofgem is able to build a more detailed set of customer archetypes and customer journeys in relation to different TPI services. As highlighted previously, Consumer Scotland will be undertaking consumer experience and journey mapping research of small businesses in Scotland using energy brokers and consultants. In particular, our work will explore the extent to which consumers are proactive or reactive in their engagement with brokers, their motivations for using their services and how far these are met, and how wider awareness and understanding of the TPI sector and the energy retail market shapes these experiences. We will be pleased to provide our findings to Ofgem when these are available.

Regarding small businesses and their interactions with TPIs, we recognise the poor outcomes including mis-selling and aggressive selling and highlighted by Ofgem and which we have articulated in responses to Qs 1, 2, 5 and 7. As highlighted in our response to Q5., Consumer Scotland identifies that regulation provides an opportunity to bring an end to verbally binding agreements for small businesses in the non-domestic energy retail market and introduce cooling-off periods.

The customer journey set out in the call for input reflects a typically well-understood broker/business interaction. What is less well understood are customer journeys related to TPIs providing services to consumers in the domestic retail energy market including auto-switching and bill splitting services.

14. To what extent do TPIs specialise by factors including consumer type, sector, or size of client?

a) What factors motivate this specialism?

Not answered.

15. What value do TPIs bring to the energy sector and what services do consumers value from them?

Consumer Scotland’s small business research highlights the high levels of satisfaction that small businesses in Scotland report around their use of TPIs and broker in the retail energy market. 77% of those using a TPI to secure energy goods and services reported being satisfied with the service they received.[26] Although noting, as in response elsewhere, that levels of dissatisfaction amongst small businesses in Scotland when using TPIs and brokers in the energy market are relatively higher compared to other markets

Positive experiences are also reported in Ofgem’s non-domestic research which found that businesses considered their brokers to be knowledgeable and responsive and they were able to get deals through their brokers that they would not have been able to access otherwise.[27] These positive experiences were also reflected in Citizens Advice commissioned research.[28] However, for all the reasons highlighted in previous responses, there are still a number of challenges to be addressed and cases where consumers do not believe they are receiving good value.

Going forward, TPIs could continue to play a role in delivering consumers the best deals and increasingly assist customers to flex their demand and use new technologies such as heat pumps to the greatest effect. In essence, making it as simple as possible for all consumers to access affordable and sustainable energy. Yet this can only work if a sufficiently robust regulatory framework is in place to ensure consistency and coordination across suppliers and TPIs, that consumers have access to the information they need to help them use TPIs with confidence, that the products and services offered by TPIs to consumers are of a suitable standard and meet their needs, and that when things go wrong resolution and redress processes are accessible, navigable and enforceable.

16. How are commission and other remuneration or benefit arrangements made in the TPI sector? We are interested in understanding how TPIs are remunerated or otherwise receive a commercial benefit, who and what determines the level of remuneration/benefit, what incentives do different existing remuneration/benefit structures create, and any concerns you may have on typical remuneration/benefit structures.

Not answered.

17. To what extent do TPIs face conflicts of interest (e.g. from commission structures or supplier relationships)?

a) How do these affect the advice or services provided to consumers?

As Ofgem have identified themselves, the commission arrangements between suppliers and TPIs do have a bearing on the advice and services provided to consumers, and these arrangements and their impacts are not always well understood by consumers. We welcome the decision taken by Ofgem to require suppliers to make third-party costs clear in non-domestic contracts and ensure transparency where suppliers are paying TPIs to promote certain deals. However, through direct regulation, TPIs need to be made responsible for ensuring consumer clarity on charging structures and supplier relationships and how these shape the services they provide, e.g., market coverage of price comparison of deals available and offered to the consumer.

18. What do you consider we should focus on when we regulate TPIs?

Consumer Scotland proposes that Ofgem should focus on the following priorities in designing and implementing TPI regulation:

A flexible and agile regulation framework, able to respond to an evolving energy retail market and support delivery of wider sustainability, flexibility and bill reduction ambitions.
A risk-based approach to authorisation in which the levels of scrutiny of market entrants are proportional to the control they anticipate having over consumer-decision making and the level of potential impacts on consumers’ lives as a result of those decisions.
Regulation that supports, promotes and meets the needs of consumers in vulnerable circumstances.
A consumer-outcomes driven approach that ensures TPI regulation is a) consistent with other areas of regulation including supplier licence conditions and the Smart Secure Electricity Systems programme and b) accompanied by strengthened consumer protections, particularly for small businesses.
A framework that supports strong and swift enforcement including sufficiently high levels of authorisation fees and penalties to resource action and deter bad practice.
A framework that includes appropriate mechanisms to encourage and embed best practice.
A monitoring and reporting system that allows Ofgem to understand the evolving state of the market, identify systemic issues and assess how regulation needs to adapt and evolve.