UKH: Ofgem recommendations ‘must be actioned urgently to avoid further business failures’

By James McAllister

- Last updated on GMT

Ofgem recommendations ‘must be actioned urgently to avoid further business failures’, hospitality sector warns

Related tags Ofgem Business Energy costs Energy suppliers Finance Government ukhospitality

UKHospitality (UKH) has warned recommendations made by Ofgem in its non-domestic market review ‘must be actioned urgently’ if the sector is to avoid further business failures.

In its review, published today (26 July), the energy market regulator made a series of recommendations and proposed regulation changes in a bid to better protect customers in the non-domestic sector and hold suppliers to account.

They include changes to the regulatory framework to require timely responses to complaints and stepped-up reporting to Ofgem on complaint handling, amid evidence that non-domestic customers are not always receiving the levels of customer service they need and have a right to expect; and proposals to increase transparency of third-party intermediary (TPI) commissions for all customers.

Ofgem has also called on the Government to consider implementing regulation of the TPI market, and give businesses unable to resolve a problem with their TPI greater access to redress schemes.

Additionally, the energy regulator has requested the Government consider widening access to the energy ombudsman, which is currently restricted to domestic customers and smaller businesses; and says it will work with stakeholders to improve transparency in bills.

UKHospitality, which has long called for Ofgem to investigate unfair practices in the energy market​, welcomed the report, with Kate Nicholls, the trade body’s chief executive, noting that energy ‘continues to be a critical concern’ for hospitality businesses.

“It’s great to see that our ongoing campaigning has been acknowledged and that action is being taken to provide some much-needed support,” said Nicholls.

“By opening up new channels of communication, extended protections and more guidance, businesses across the industry can benefit from levels of support that simply have hitherto been lacking.

“UKHospitality has continued to raise the reckless behaviour of some energy suppliers with Government, with some offering rates well above wholesale prices, hiking standing charges, demanding eye-watering deposits, and, in some cases, refusing to work with hospitality companies.

“A recent member survey shows that energy costs are up 80% year-on-year and almost half of businesses who signed a contract at the peak of the energy crisis fearing their business is at risk of failure. 

“Whilst it has been a long time coming, it is reassuring to see that Ofgem is now doing what it can to support the hospitality sector.”

UKHospitality was one of eight leading trade groups to sign an open letter earlier this week, organised by not-for-profit energy consultancy Box Power CIC, which demanded Ofgem take ‘immediate’ action on hidden charges by energy brokers, stating that the businesses they represent are being taken advantage of.

It follows revelations earlier this year​ that energy companies are facing a £2bn legal claim over allegations they paid 'secret commissions' to TPIs and passed on the cost to billpayers.

“Energy companies must be held to account, and we are committed to continuing to work with Ofgem and Government to ensure the market is future-proofed,” Nicholls added in her response to Ofgem’s review.

“The recommendations in this review must be actioned urgently, as delays could lead to further business failures – of which there have been a significant number.” 

Ofgem said it believes its new policy proposals are ‘proportionate’ and ‘will hold suppliers to account while bringing positive benefits to non-domestic consumers’.

It added that it welcomes any feedback on these proposals to AbaQbzrfgvpErgnvyCbyvpl@bstrz.tbi.hx​ by 6 September 2023.

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