Citizens Advice response to Ofgem’s Microbusiness Strategic Review: Statutory Consultation
In line with our response to Ofgem’s initial consultation we are pleased to see that many of the proposals outlined are being taken forward. We are particularly supportive of proposals in relation to:
- Broker cost transparency
- Alternative Dispute Resolution (ADR)
We strongly support the principle of introducing a 14 day cooling-off period for all microbusinesses, which will give consumers the flexibility to change their mind and protect them from mis-selling or aggressive tactics. However, we have significant concerns about the detail of the proposals, particularly the cut-off at 28 days before the supply start date. This will mean that potentially a majority of switches have a cooling-off period shorter than 14 days, or no cooling-off period at all, creating significant confusion for consumers.
This flawed approach is stacked against consumers, and we cannot support the proposal in its current form. In this response we suggest some immediate improvements Ofgem could make to its proposals which make use of the planned functionality of the new switching arrangements. These should enable many more consumers to benefit from a cooling-off period, and we don’t expect them to incur significant system costs for suppliers.
In the longer term we think the cooling-off process should be aligned with the domestic cooling-off rights, so that all microbusinesses that switch receive a full 14 day cooling-off period. In its decision Ofgem should set out clear next steps for how and when it will evaluate the costs of benefits of this reform, once the new switching arrangements are implemented.
We are also disappointed that two proposals have been dropped that we think would have had benefits for microbusinesses:
- Broker conduct principle
- 30-day contract extensions following blocked switches
There were a number of important areas that we have highlighted from the inception of Ofgem’s review, where no action has been taken. This is a missed opportunity. We think the risks to consumers in these areas have grown, as a result of the pandemic:
Debt and disconnection - These are some of the most common issues that microbusinesses contact Citizens Advice about. There is a wide range of supplier practice, with some consumers receiving no support from their supplier
Supplier of Last Resort - Currently, if microbusiness suppliers fail, consumers risk losing any credit balance and security deposit, through no fault of their own
- Vulnerability - We continue to see cases of disconnection for people living in mixed-use premises on non-domestic contracts, and support changes to tackle this detriment. More broadly, we also see cases where, had a microbusiness consumer been on a domestic supply contract, they would have been classed as being in vulnerable circumstances. These consumers are at greater risk of debt and mis-selling.