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A damning report finds that brokers and other Third-Party Intermediaries (TPIs) are directing consumers to suppliers with unsustainable prices and unsuitable products, under the guise of the ‘best deal’ on the market.
The report published by the House of Commons, on ‘Energy pricing and the future of the energy market’, addresses Ofgem’s failure to regulate TPIs, and proves that switching direct remains the most reliable way for customers to find sustainable water and utilities suppliers.
TPIs refers to a range of services including brokers, price comparison websites, collective switches, bill splitters, auto-switchers and smart TPIs. In the energy sector, consumers receive additional protections (in addition to general consumer law) when dealing with energy suppliers as they must comply with licence conditions which set out their responsibilities to customers. However, TPIs are not licensed or subject to regulations.
The select committee stated in the report, “the combination of using switching rates as the key metric to determine the health of the market, the inadequate controls over the business practices of energy suppliers, and Ofgem having limited regulatory oversight of third-party intermediaries (TPIs) led to these services promoting unsustainable pricing and risky supplier business models.”
These pricing models are exploited through price comparison websites that lead customers to believe they are receiving the ‘best deal’ on the market; rather than unrealistic, unmanageable pricing expectations that do not reflect actual usage rates, and inevitably accrue customer debt.
The report warns that price comparison websites direct “savvy, engaged consumers to new suppliers, who were offering unsustainable prices to the detriment of disengaged (and often vulnerable) consumers who are now also paying the costs of supplier failures.”
TPIs financial negligence for customers and retailers has been reported in their lack of service transparency, contract breaches, and operational failures (whereby TPIs commission-based suppliers were only applied to price comparison websites). Revised regulatory measures are necessary for Ofgem to maintain market credibility and customer integrity.
The report states, “Citizens Advice argued that TPIs disregarded the financial resilience of suppliers and their customer service standards…and found cases where TPIs failed to provide a transparent service and switched customers to unsuitable products where they lost out on protections, with no recourse.”
The ongoing pricing crisis in the energy market and cost-of-living increase had led to financial burden in the household and non-household market; this pressure has seen customers resort to finding alternative, cheaper energy contracts/suppliers – primarily through TPIs.
It’s always better to switch directly with utility retailers, including for your water supply, to avoid misleading contracts, poor service, and potential debt. You can read more about our business water services & business wastewater services on our services page.
