Small business customers to receive free energy support

Businesses with fewer than 50 employees will be entitled to free support on disputes with their energy supplier later this year.

The government has announced today (4 April) that the remit of the Energy Ombudsman is being extended to cover 99% of all businesses in Great Britain.

Currently domestic customers and companies with fewer than 10 employees can use the Ombudsman to settle disputes with their supplier – including complaints about energy bills, customer service, or how a product has been sold.

The Ombudsman has the power to order suppliers to provide compensation of up to £10,000 or take action to resolve issues – such as by raising standards for their customers, or crediting or amending customer accounts.

As well as disputes with their supplier, new Ofgem rules announced today mean small businesses will be able to settle disputes with third parties such as their energy broker via the Ombudsman, negating the need for costly legal proceedings.

It comes as the energy regulator has unveiled a raft of stronger protections for business customers.

From 1 July Ofgem will:

• Expand the Standards of Conduct to apply to businesses of any size, rather than just micro businesses. This will give Ofgem powers to take action against suppliers that do not treat non-domestic customers fairly.
• Introduce a new supply licence rule for non-domestic suppliers which requires them to signpost micro business customers to Citizens Advice and Citizens Advice Scotland, who can offer support and advice when they have an issue. This will also apply to small business consumers from December 2024, subject to the government’s new definition of small business consumer entering legislation.

Further changes that the regulator expects to be in place by the end of the year include the expansion of the requirement for a contract’s principal terms to clearly display any broker fees to all non-domestic customers.

From December, Ofgem will also

• Update the Complaints Handling Standards to ensure suppliers put in place suitable complaints processes for small business consumers and point them to the Energy Ombudsman when a customer does not feel the issue has been resolved.
• Implement a requirement for suppliers to only work with third-party intermediaries (TPIs) that are members of a redress scheme when securing small business contracts.

Tim Jarvis, Ofgem’s director general for markets, said: “Too many businesses have experienced issues with some energy suppliers, from difficulty getting the right contracts, unexplained price hikes, and poor customer service.

“We’ve worked hard to understand the breadth of issues and where the powers we have to tackle them can be improved. These new rules will help ensure businesses get the service they deserve.

“We’ll be speaking to businesses of all sizes as these rules come into force throughout this year to make sure they are being followed by suppliers. We’ll also continue to work with government, industry, and consumer groups to see what else can be done to support non-domestic consumers.”

Martin McTague, national chair of the Federation of Small Businesses, said: “Allowing more small businesses to take their cases to the Energy Ombudsman is the right thing to do, and something we have campaigned for, as there’s a huge imbalance in terms of resources and legal firepower between a small firm and an energy company. The era of small business owners having to use their own savings to try and get a just resolution to an energy dispute needs to end.

“Ensuring that energy suppliers can only work with brokers who are a part of the redress scheme will go a good way towards protecting small businesses from mis-selling and bad practice, as will the new fee transparency requirements. Honest and reputable energy brokers play an important role, and small firms deserve better protection from rogue operators, which these new rules should help provide.”

Ed Dodman, director & chief ombudsman for Energy Ombudsman, said: “We’re very pleased with this announcement – we believe that businesses should have the same access to support as consumers and the addition of small businesses is very much welcomed.”

“By extending the services to cover all small businesses, it fills an existing protection gap and means organisations, who may have more limited resources, will be able to access the support they need,” he added.

Minister for affordability and skills Amanda Solloway said: “We take pride in our British businesses and that’s why this government will always stand by entrepreneurs.

“All businesses deserve to get a good service from their energy supplier – and today’s changes will empower small businesses with free redress support via the Ombudsman.

“This is just the beginning. Rip-off energy brokers have no place in our market and we will act to raise standards for customers.”