By Daniel Hunter

Energy regulator Ofgem is consulting on major reforms to make the energy market fairer for small business customers. Although a review found that in general business consumers found it easier to engage in the energy market than households, Ofgem concluded that more protection was needed for smaller businesses.

Ofgem is proposing to widen the number of small businesses that benefit from its existing safeguards to ensure contract terms are clear. The rules currently apply to Britain’s smallest businesses - which typically employ 10 people or less*. Extending the rules will mean an extra 150,000 businesses will be covered, protecting customers that typically spend up to £10,000 a year on each fuel.

Ofgem is further proposing that all bills and statements that small businesses are sent also show clearly when the contract ends, so that fewer businesses get caught out and pay more for their energy than they need to.

Andrew Wright, Senior Partner, Markets, said:”Our retail market review showed that small businesses want fairer treatment from suppliers, clearer information about contracts, and more protection from misselling. Our proposed reforms seek to address these issues. We urge suppliers to show they are committed to restoring the confidence of business consumers by getting behind our proposals.”

Businesses have reported that switching suppliers can sometimes be time consuming, especially if they have been barred from switching by suppliers without a clear reason. An Ofgem licence condition prevents suppliers from blocking a switch unless there are legitimate reasons. Ofgem is closely monitoring the actions of all suppliers in this area and the regulator is already investigating British Gas Business over allegations that it incorrectly objected to some businesses switching.

Energy brokers play an important role in the business market and although they often ensure business consumers get a good deal, there are concerns that some use high pressure sales tactics or give misleading information. So Ofgem is also planning to clean up the practices of some energy brokers by developing an industry-wide code of practice for them.

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