Third Party Intermediaries (TPIs) have an important role in the non-domestic energy market. They help to streamline the pricing and contracting element of securing energy contracts for businesses, whilst also providing a sales channel for suppliers.
This market is currently unregulated and in recent times faced increasing criticism for not being transparent in their dealings due to a few bad actors within the market. We wanted to understand the issues and challenges within the market with a view to finding possible solutions that RECCo could facilitate. We initiated this project with stakeholder workshops that sought views on issues we’d identified. For further details of those workshops see: “We’re introducing a Code of Practice to the TPI market – Retail Energy Code Company”.
Our stakeholder engagement with non-domestic energy suppliers, brokers and aggregators showed support for greater governance in the market. In particular, there was overwhelming call for the introduction of standards that would improve practices.
We are pleased to confirm that we have taken the first steps to introduce a Code of Practice (CoP) for TPIs by raising a REC Change Proposal. It sets out a principles-based approach to setting standards.
Who does the Code apply to?
At this stage we see no reason why the principles of the CoP and assurance that may be provided by any supporting accreditation scheme should not be extended to the non-domestic market as a whole. While some larger consumers may be sophisticated and well informed consumers, perhaps assisted by specialist energy procurement managers and therefore not in need of the same sort of protections as introduced by Ofgem for smaller business consumers, the issues may apply to the higher consuming sector of the market.
Feedback
The full draft CoP can be found here.
As part of our initial work, we sought input on the draft CoP, this helped shape our thinking and approach. A summary of the key points and actions can be found here. Interested parties have a further opportunity to provide feedback on our proposed draft. Comments should be submitted to recco_strategy@retailenergycode.co.uk by Friday 15 September.
The TPI CoP will be baselined and incorporated into the REC with effect 1 October 2023. From that point on it will be subject to formal REC change control.
Accreditation and assurance
RECCo will continue to develop the TPI assurance and accreditation regime. This will ensure that REC Parties are only using TPIs that adhere to the CoP principles. We will seek to ensure that any accreditation regime we put in place is demonstrably robust and negates the needs for any supplier to undertake their own audit of a TPI, thereby removing much of the administrative burden and inefficiency that currently exists. This will include the development and maintenance of a publicly available register of accredited TPIs. However, our current view is that suppliers will retain the option to engage with a non-accredited TPI, in which case they would be expected to undertake their own audit, or otherwise satisfy themselves that the TPI is nonetheless compliant with the CoP principles and to provide warranty to that effect.
Change of tenancy
One of the key issues that emerged from our stakeholder workshops was the use, and potential mis-use, of the Change of Tenancy flag by the incoming supplier and the use and potential mis-use of the objections process by the losing supplier. This issue was also highlighted to Ofgem in response to its Non-domestic market review, the findings of which were published 26 July. As referenced in the Non-domestic market review: Findings and policy consultation, we will work with Ofgem to establish clear guidelines and requirements for the documentary evidence that will be taken as proof of a Change of Tenancy.
Interested stakeholders who wish to be part of these discussions should email recco_strategy@retailenergycode.co.uk and are asked to copy in NonDomesticRetailPolicy@ofgem.gov.uk
Next steps
We have raised REC Change Proposal R0137 to introduce the TPI CoP assurance and accreditation framework as set out above. We will continue to develop the framework in the coming months, with a view to implementing this early in 2024/25. We recognise that this work is of interest to non-REC Parties, and will therefore provide regular updates on our the progress on the RECCo website as well as the REC Portal.
We will raise a separate REC Change Proposal to formally progress the work on Change of Tenancy as set out above.
We will shortly issue a plan setting out these steps in further detail, including information on how interested parties can engage with this process. In the meantime, if you have any queries or comments please contact is at: recco_strategy@retailenergycode.co.uk.
