Third Party Intermediary - TPI Third Party Intermediary - TPI by Gemma

A Call to Ofgem for TPI Regulation from a TPI (Third Party Intermediary)

July 2017

Surveyors, architects, construction companies and financiers are all regulated to ensure certain standards are adhered to, that quality ensues and to prevent mal-practice within the building and construction industry. Can you imagine the chaos if the regulation wasn't in place? What the standards would be like if all parties didn't have to adhere to specific standards?

With this in mind, hundreds of millions of pounds are spent on business energy each year through Third Party Intermediaries (TPIs), with zero regulation on the companies providing energy procurement advice. To protect businesses/ non-domestic users, this has to change.

The term TPI can cover energy consultants, energy brokers or price comparison websites (the latter doesn't currently work very well for the non-domestic market/ business users due to the bespoke nature of business energy prices), all of which should have a similar goal; identify the most appropriate energy contracts for each client with emphasis on cost, consumption and contract terms. Plus, some added bonuses and out of the box thinking from the better companies.

A good TPI should be providing a very valuable service that not only saves their client money, but also ensures minimal input. So why, according to Ofgem, are so many businesses unhappy with the involvement of a TPI?

Unfortunately, the answer is simple; Rogue TPIs. We're contacted every day by companies wanting help because of an energy contract they're in (it's probably worth noting here that not all of these contracts have been presented by TPIs, but the energy companies themselves!). Incidentally, we're also called more or less every week by the same rogue TPIs, trying to sell us something too. No, really. They generally hang up when we start quizzing them.

It is clear that some "rogue TPIs" are not acting in the best interest of the end client and are, in fact, taking advantage of a complicated system that currently has very little transparency lucidity and is completely unregulated. We've seen examples of very large commissions being taken and high pressure sales techniques being deployed forcing clients to accept inappropriate and inflated contracts. These contracts are sometimes agreed to over the phone (please don't do this!) but have sometimes been physically signed too. There are also instances where an end user has had their energy supply switched without any knowledge of who authorised the switch and why it has been done (this actually happened to one of our business neighbours). This is not only improper, for those who suffer directly, but is also causing a lack of trust in the industry as a whole.

A TPI should be seen as a very useful asset to an organisation (whether that be a business or charity) in its procurement of business energy (and other services too of course). However, from the stories that clients tell us about previous experiences of working with TPIs it seems that those who would benefit the most from a good TPI are actually the ones falling victim to their morally bankrupt way of providing a "service".

Mandatory regulation is now a necessity

If it was widely known that all TPIs are regulated and MUST therefore be acting in the best interest of the client then the industry's reputation would improve and allow businesses and charities to truly benefit from working with a TPI to procure their essential business services.

What could the Ofgem TPI regulation look like? - This is our simple version

  • Transparent fee structures should be in place (we'll tell any client this - some ask, some don't).
  • Aggressive, forceful and misleading sales tactics really need to be stopped.
  • An effective complaint process needs to be in place for if end users feel they have been misled. (There is currently a large gap in the market for non-micro businesses as to how they can actually complain).
  • Ensure all TPIs provide genuine market wide tendering, and if any suppliers are omitted, state why.
  • Ensure all TPIs compare each supplier on the same basis (e.g. accurate annual kWh consumption, type of contract etc.).
  • Ensure pressure selling and verbal contracts are a thing of the past. (Please don't agree to anything over the telephone - ask to see a physical contract).

  • Punishment for breaking any part of the code should be well publicised. It also needs to be extremely hard, if not impossible, for such "rogues" to continue operating once they've been named and shamed. Some TPIs would of course go out of business. But that's because they'd be unable to work within the new code of practice.

    However, here's the main problem so far. End users, energy suppliers and reputable TPIs would all benefit from regulation from Ofgem. But the major issue is cost and how to pay for regulating the regulation; if it's funded by the energy suppliers themselves, how will it be impartial?

    Ofgem have put together a Draft Code of Practice for Non-Domestic Third Party Intermediaries. The objective of this Code (the "Objective") is to: 'protect the interests of non - domestic consumers and, in particular, their interests in having the confidence that when using a Third Party Intermediary (TPI), the TPI will act in a fair, honest, appropriate and transparent manner and effectively assist them with their energy supply needs'. The complete and working regulation can't come soon enough for us.

    "A TPI should be seen as a very useful asset to an organisation (whether that be a business or charity) in its procurement of business energy (and other services too of course). However, from the stories that clients tell us about previous experiences of working with TPIs it seems that those who would benefit the most from a good TPI are actually the ones falling victim to their morally bankrupt way of providing a "service"."