On March 12th, we provided an update on our plans to introduce an accreditation and audit framework to the Third-Party Intermediary (TPI) Code of Practice that we published in October 2023. Subject to Ofgem accepting the necessary Change Proposal, this will make it mandatory for non-domestic Suppliers to only use intermediaries adhering to the Code in the future.
Webinar highlights
The webinar, hosted by Senior Strategy Manager Suchitra Hammond, provided an overview of the upcoming Change Proposal regarding the TPI Code of Practice. Director of Development and Strategy Jon Dixon explained that the Change Proposal will be formally presented at the end of March and is intended to involve a broader range of stakeholders beyond just TPIs and existing REC Parties.
Historical context
Jon provided some historical context, noting that discussions around a TPI Code of Practice date back around ten years, with recent efforts focusing on formalising and enforcing the code. He emphasised that the goal is to raise standards, boost consumer confidence, and ensure suppliers meet their obligations under the code and their licenses.
Making the Code mandatory
The proposed changes seek to mandate the current voluntary TPI Code of Practice so that Non-Domestic Suppliers must only work with accredited TPIs. This will improve TPI standards and practices and bring better outcomes for consumers.
The proposed process
The accreditation process will require TPIs to demonstrate that they meet the minimum requirements of the Code of Practice. This will involve an application process and compliance checks of key documents.
Jon also discussed the RECCo administration of accreditation, which may initially involve manual checks of relevant documentation but with a view to it being automated in due course. Audits and ongoing monitoring will ensure compliance and address any issues proactively.
How does the Change Process work?
Caroline Freimuller joined us from the REC Code Manager to explain the Change Process, mainly focusing on how it will be managed and communicated. She explained that the process involves confirming the responsible committee, reviewing impacted parties and documents, and setting milestones in a change proposal plan.
Watch the recording
If you missed the webinar, you can watch the recording in full below or download the presentation slides here.
Next steps
- We aim to submit updates to the existing R0137 Change Proposal by Easter.
- We will then commence the change process, ensuring that stakeholder engagement shapes the process.
- We aim to submit the final Change Proposal for authority approval (Ofgem) by this Autumn.
Key questions from the webinar
Our webinar participants raised a number of valuable questions, which are summarised alongside responses from the RECCo presenters below:
Will the TPI register be available via an API?
We will consider making the TPI register accessible via an API, though the systems requirements remain in development and will be informed by the evolution Change Proposal.
How will the accreditation process work for TPIs?
Our proposal will focus primarily on TPIs being accredited and registered through the REC accreditation process. However, we recognise that some Non-domestic Suppliers may wish to accredit TPIs directly, particularly if they have a long-standing relationship with them and/or have undertaken their own audits. Our proposals will, therefore, reflect this alternative approach, subject to development through the REC change process. Whichever route TPIs choose to undertake, they will all be required to adhere to and demonstrate their compliance with the TPI Code of Practice.
How will suppliers ensure TPIs meet the required standards?
Suppliers are responsible for ensuring that the TPIs they work with adhere to the Code of Practice and are appropriately accredited. The accreditation and audit process will check compliance to meet the required standards. Where these tasks are undertaken by the Non-domestic supplier directly, we will performance assure those entities to ensure their accreditation and audit processes meet the minimum requirements as set out in the REC so that regardless of the route to accreditation, we can check that TPIs are being held to the required standards.
When will accreditation become mandatory?
While we aim to progress the accreditation process by autumn, the exact timeline is subject to the completion of the change proposal and subsequent decisions by Ofgem. We expect there will also be a reasonable notice period for Suppliers’ to be prepared for it becoming mandatory to only use an accredited TPI. Subject to the Ofgem decision date and agreed notice period, we would hope for the mandatory accreditation scheme to be fully in effect for the start of the 2025/26 financial year.
What are the anticipated costs for TPI accreditation?
We will ensure that the additional burden in terms of both cost and time is kept to a minimum. An Impact Assessment will be issued to stakeholders for consultation as part of the change process, which will identify the indicative costs to suppliers, TPIs and, indeed, RECCo. The costs to RECCo will be recovered from those TPIs going through accreditation on a cost pass-through basis, in line with a charging methodology that will be published in draft and consulted upon as part of the change process.
Will a change of government impact the proposed changes in accreditation?
We do not anticipate any change in government policy in this area, but we are in contact with the Department of Energy Security and Net Zero (DES NZ) and will continue to liaise with them as this proposal develops.
How is the proposal linked with the DESNZ call for evidence, and what is its impact?
The proposal is not directly linked to the DESNZ call for evidence, though, as above, we will remain in close contact with the department as it develops and seek to ensure that our proposals remain consistent with the direction of travel on any further regulatory development.
Can TPIs engage with the consultation process?
Yes, all TPIs are encouraged to engage in the consultation process. It’s open to all stakeholders, and feedback from various parties, including TPIs, is valuable.
Will RECCo register TPIs that RECCo itself has not accredited?
The proposal has two key aspects. The primary objective is to ensure that all TPIs adhere to the principles set out in the TPI CoP. The secondary objective is to provide a cost-efficient means of demonstrating that a TPI is compliant without each Supplier having to carry out its own checks on each TPI that it deals with or TPIs having to undergo those checks from each Supplier.
As the REC will require non-domestic suppliers to use only TPIs who are accredited as being compliant with the TPI CoP, RECCo will develop and maintain a register of such TPIs. This will be a useful reference for both Suppliers and Consumers.
We are aware that a REC change mandating non-domestic suppliers to use only accredited TPIs may raise competition concerns, particularly if this is exclusive to those accredited by RECCo itself. Many Suppliers have their own codes of conduct and may already have checked or be in the process of checking that the brokers they deal with are meeting the same or similar standards as set out in the TPI CoP. We also recognise that there are alternative accreditation bodies.
Our current view is, therefore, that the register should not be exclusive to only those TPIs that have been accredited under RECCo’s own scheme but also recognise any TPI that can genuinely demonstrate its compliance with the TPI CoP through other means. This could be a permanent arrangement or for a transitional period only, particularly given that there are over 2,000 TPIs[1] who will need to go through accreditation. However, this is an area which we expect to explore further as the change proposals develop and through discussion with Ofgem.
To facilitate further discussion and possibly help inform Ofgem’s eventual decision on the change proposal, we will provide a provisional competition assessment to be consulted upon as revised as necessary.
[1] There are over 2,100 different organisations registered with Alternative Dispute Resolution scheme operated by the Energy Ombudsman.
Will there be training and support for TPIs to understand compliance standards?
RECCo is open to providing training, standardised templates, and guidance to support TPIs in meeting compliance standards. We aim to build consumer trust and confidence in the market, so we welcome any suggestions to help achieve that aim.
Can the proposals be challenged?
Our rationale for each aspect of the proposals will be shared and may be challenged as part of the change development process. We remain open to modifying our proposal if our analysis or working assumptions prove to be incorrect and a better approach emerges. If a consensus on the preferred approach cannot be reached, any party may raise an alternative proposal; this is not exclusive to REC parties. If appropriate, the original proposal and any alternatives would then be submitted to Ofgem for its decision.
