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Energy reforms are "big win" for small businesses

The Federation of Small Businesses has welcomed the decision by the Competition and Markets Authority to reform the UK energy market.

Mike Cherry, the national chairman of the Federation of Small Businesses (FSB) said: 

"Today's CMA decision is a big win for FSB and for small businesses up and down the country. Transparency and fairness should be at the heart of a functioning energy market for small firms."

The FSB has campaigned to bring more transparency to the energy market. Now the CMA has decided that comparable tariffs should be published. This, said the FSB, "will make it easier for micro-businesses and sole traders to quickly compare energy prices and choose the best contracts".


The CMA recommendations also bring an end to unfair auto-rollovers. While many energy companies have voluntarily removed restrictive auto-rollovers, today's decision will guarantee businesses are not automatically locked in to further fixed-term contracts against their will.


Mike Cherry said: 

"A third of small firms highlight the cost of energy as a barrier to the growth and success of their business. Energy tariffs, published in a clear and comparable way, will make it much easier for small firms to secure a decent energy deal and empower them to make decisions that are right for them. Removing unfair terms and conditions from auto-rollovers will also ensure business owners are not caught off-guard when their contract expires
"Bringing fair and transparent energy deals for the UK's 5.4 million small firms will inevitably bring more jobs, increased revenue and improved productivity to the UK as a whole," he added.

However, the FSB has said that it is disappointed that the CMA has not addressed concerns around the regulation of third party intermediaries (TPIs). The FSB said: "TPIs offer a valuable service to smaller firms, but some rogue TPIs are undermining the industry as a whole. TPIs need to be regulated so that businesses are not discouraged from using their services to gain more competitive energy deals."


This issue now falls to energy regulator Ofgem. The FSB will be supporting Ofgem as it works toward a code of practice for non-domestic TPIs.


Mike Cherry added: 

"Third party intermediaries can be incredibly helpful to small businesses searching out fair energy deals. But there is a lack of trust in the industry, partly caused by some TPIs who cut corners or act unethically. This market failure must be addressed as soon as possible. FSB would like to see a regulatory framework for TPIs developed by Ofgem within the next year."

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