Citizens Advice response to Ofgem’s strategic review of the microbusiness retail market

As longtime advocates for further protections for microbusiness consumers, Citizens Advice welcomes the opportunity to provide our response to Ofgem’s strategic review of the microbusiness retail market.

The consumer service receives a high volume of calls regarding debt and disconnection. The Extra Help Unit receives most contacts from microbusinesses in these areas as well. The cases we see are often quite far along in the customer journey, where a considerable debt has been built up and the consumer does not have many options available to them. 

During the period of June 2018 to May 2019, we had 189 unique cases where a debt amount was stated in the case notes. From this data, we saw an average debt value of over £8,500. This is only from the cases where a debt value was specified in the call. These debt levels are self-reported by consumers and aren’t verified by call handlers (for example by checking bills). Therefore, we would like to see much more communication between the supplier and consumer, to prevent a large debt being built up. We would also like to see more repayment options offered to the consumer. 

We are pleased that the role of TPIs in the non-domestic sector is being queried here. We see numerous cases relating to consumer harm resulting from a minority of TPIs/brokers. We are concerned about the lack of regulation in this space. We would like to see more transparency regarding commission levels and the relationship TPIs have with suppliers and the wider market. To promote this, in the short term we are in favour of a Code of Practice. But in the longer term we would like to see regulatory protections in place. 

While we are pleased with the range of areas of consumer harm being considered for this review, we think two additional areas deserve attention. The first is Supplier of Last Resort, where microbusinesses lose out on the credit balance protections available to domestic customers - despite having very little power to protect these funds. We are concerned that this issue is not currently being addressed by Ofgem’s licensing review. 

The second area of additional focus is the impact of vulnerability for non-domestic consumers, where there is emerging evidence of the role issues including mental health can play for the smallest businesses. We understand that this is a complex area, and requires an in-depth consideration. One benefit of the strategic review running through to 2021 is that it should have the time to look at more difficult issues and collect evidence. 

In addition to research, we publish a non-domestic energy supplier rating table, updated quarterly. This indicates the wide range of supplier performance, and therefore the difference in how consumers experience the market. We also have online advice for consumers in debt. We think there should be better signposting of advice services for microbusiness, so they know where to come for help and do so at an early stage when problems are more manageable.