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Closing the protection gap

25 October 2019

Closing the protection gap [ 3 mb]

Citizens Advice provides advice and support to thousands of microbusinesses each year. These businesses often contact us with problems for which they have relatively few protections. This includes:

  • Problems around debt, which can ultimately result in disconnection from their energy supply.

  • Contract issues.

  • Problems caused by a minority of third party intermediaries - particularly brokers - using aggressive tactics to misrepresent and mis-sell. 

These protection gaps illustrate that the non-domestic energy market is not working well enough for the smallest businesses. We think it’s time to start to close these gaps. The recommendations of the [Closing the protection gap] report seek to address these and other issues faced by microbusinesses.

Our report has 5 main recommendations:

  • Industry should improve processes for microbusiness consumers around debt and disconnection

    • Industry should consider how to improve its debt practices for all microbusiness consumers as part of its requirement to treat customers fairly.

  • TPIs should be transparent on commission, market coverage, and any fees should appear on bills

    • TPIs should present information about market coverage, disclose their commission arrangements and the nature of their relationships with suppliers.

  • Government should introduce appropriate regulation for brokers and other third party intermediaries

    • Voluntary codes of practice exist, but they still allow a minority of TPIs to cause detriment to consumers. A more effective step further would be appropriate regulation, based on high-level, principles based rules. 

  • Ofgem should protect microbusinesses if their suppliers fail

    • A protection scheme should be established for microbusiness customer credit balances and security deposits.

  • Ofgem should evaluate the experience of vulnerable microbusiness consumers in the non-domestic sector

    • It’s unclear to what extent consumers in vulnerable circumstances are protected by the microbusiness Standards of Conduct, particularly in relation to debt and disconnection.



Supporting research:

[The Role of Third Party Intermediaries (TPIs) in the GB SME and Microbusiness Energy Supply Sector]