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Publications / Briefings and explainers

Third-party intermediary regulation

Third-party intermediaries (TPIs) sit between energy suppliers and customers, helping customers navigate the marketplace and secure contracts for their energy supply. As the UK transitions toward Net Zero, the time has come to regulate the TPI sector to curb undesirable behaviours toward customers.

  • Third-party intermediaries (TPIs) play an increasingly important role in boosting competition and supporting customers’ participation in what can sometimes be a complex market. They are key in the switching and engagement behaviours of customers. As the UK transitions to a smarter, more digital energy system, new, more innovative – and potentially complex – TPI models are emerging.
  • TPIs help most non-domestic energy customers secure their contracts. In its review of the non-domestic market,1 Ofgem found that TPIs work with around 60% of larger non-domestic customers and around 25-30% of smaller, non-domestic customers. Ofgem estimates that there are at least 2,000 TPIs operating in the market.
  • The Retail Energy Code (REC) – the industry-level set of arrangements governing retail aspects of the energy market – has established a voluntary code of practice2 (CoP) for TPIs, which requires the delivery of greater transparency and fair treatment for customers, and says that suppliers must work with CoP-accredited TPIs.
  • Ofgem acknowledges the deficiency in consumer protection that the absence of TPI regulation permits in the energy market. It has called for the Government to consider implementing a regulatory regime for TPIs.3
  • Where TPIs are securing energy contracts for small businesses, Ofgem will introduce a requirement for energy suppliers to work only with TPIs that are members of a customer dispute resolution and redress scheme. This will give these customers comfort that they will have access to a fair dispute resolution process, should problems arise in dealings.
  • Citizens Advice has also called for the regulation of TPIs to protect customers.4
  • As the market evolves through the Net Zero transition, non-domestic customers’ experiences are marred by undesirable TPI behaviours.
  • These include intimidating customers, leading them into long-term unsuitable energy contracts, and misleading non-domestic customers into believing the TPI is the energy supplier.
  • TPIs are increasingly significant to the customer experience but the regulatory regime is out of step with their evolution in the retail energy market. This is a failure to protect energy customers.
  • While the REC’s CoP for TPIs is better than a complete absence of measures for the protection of non-domestic customers, it works via rules set for suppliers. This means the role of TPI regulator effectively sits with energy suppliers, rather than a specific regulator.
  • TPIs should be regulated. This is critical because of the vital role TPIs play in non-domestic customers’ engagement with the energy market, and the transition to Net Zero.
  • Energy UK supports Citizens Advice’s recommendation of authorisation – which “allows companies to start and continue operating as long as they follow certain rules” – as a suitable option for TPI regulation.
  • A TPI authorisation regime should be governed by a body that is afforded full regulatory powers. There is merit in its ways of operating being underpinned by principles established within the existing CoP for TPIs.
  • An authorisation regime for TPIs will provide a flexible and balanced regulatory approach that empowers the appointed regulator to respond proportionately to non-compliance. To create a level regulatory playing field, such a regime must ensure there is symmetry between different parties’ obligations for similar activities.
  • The regulatory regime must be sufficiently flexible to accommodate new and innovative TPIs. This would ensure consumers including businesses of all sizes are protected from harm as the market evolves.

1 Ofgem (2023), Non-domestic market review: Findings and policy consultation
2 RECCo (2024), Code of Practice for Non-Domestic Third-Party Intermediaries
3 DESNZ (2024), Putting consumers first: empowering and protecting energy consumers
4 Citizens Advice (2020), Stuck in the middle