Our Programmes
Last week, ITV reported that thousands of UK businesses are considering legal action over deals arranged by energy brokers. They highlighted that a minority of bad brokers have been charging hidden commissions and not providing deals that have their customers’ interests at heart. This highlights the importance of the work that we are doing to ensure a fairer energy market, in particular through the introduction of a TPI Code of Practice that will raise standards and confidence in the brokers that consumers and energy suppliers deal with. Learn more and respond to our consultation below.
Why are we introducing a Code of Practice?
Earlier this year, we met with non-domestic Brokers and Suppliers, asking, “How can we more effectively govern non-domestic Brokers?” Both parties agreed that Brokers play a vital role in helping business consumers find and secure energy tariffs and services that are appropriate for their business.
However, it was also recognised that the lack of regulation and oversight of brokers and aggregators had allowed bad practices to go unchecked, such as encouraging customers to enter unfavourable contracts or being unclear about commission levels. These issues were also featured in the ITV report.
Our engagement at these workshops with non-domestic energy suppliers, brokers, aggregators, and other stakeholders showed strong support for improving governance in this market sector. In particular, there was an overwhelming call to introduce standards that would improve practices.
Building upon previous work by Ofgem, we have drafted and are now consulting on a TPI Code of Practice, refining the content and completing a legal review before it is adopted as a REC document. We expect the TPI Code of Practice to be baselined and come into effect as a Category 3 REC document on the 1st of October, 2023. It is hoped that from that point, all reputable TPIs and the suppliers and consumers with whom they interact with will have a single point of reference and be able to confirm their adherence to a common set of principles.
You can read the TPI Code of Practice here.
Will the Code of Practice have teeth?
The message on this from workshop attendees and other stakeholders has been clear. We recognise that for the TPI Code of Practice to provide meaningful assurance to suppliers and customers, we will need to introduce arrangements that demonstrate which TPIs are signed up to the Code of Practice and whether they are compliant with it. To ensure a level playing field, we propose that the REC will require suppliers only to use TPIs compliant with the Code of Practice.
We have raised REC Change Proposal R0137 to put these requirements into effect, and in the coming months, we will develop the rules and associated accreditation scheme. We recognise that introducing a TPI Code of Practice may impact competition; whilst it is expected to raise consumer confidence in and engagement with the market, it may also raise costs for existing brokers and future market entrants. As such, we expect that a costed Change Report on R0137 will be referred to Ofgem for a decision.
In July 2023, the Government published responses to its Call for Evidence on the potential regulation of TPIs in the retail energy market. In the Next Steps section of that document, the Government noted that:
“[RECCo] are currently in the process of developing and introducing a code of practice to the TPI market that has input from both suppliers and TPIs. The Government will be watching the development of the Code with interest and will remain in contact with RECCo to understand more about the code’s implementation.”
Further work
Our TPI workshops also highlighted issues around the non-domestic switching process, particularly the misuse of the Change of Tenancy (CoT) flag and Objections process. We are pleased that Ofgem has also recognised these issues.
“The Retail Energy Code Company (RECCo) manages the rules set out in the Retail Energy Code. Given this change of tenancy indicator is flagged via industry processes, we propose that the agreed documents to prove CoT should be developed and agreed upon within REC processes. We have discussed this with RECCo, who also identified a need for clear guidelines for change of tenancy. We will work with them to take forward discussions with stakeholders to agree on the core documents to be requested. We want this work to commence as soon as possible and have the range of documents identified this year and the change proposal given effect through the REC by the end of the financial year to include the list within the rules of transfer.”
As indicated, we have started work to address this issue and will raise a Change Proposal to the REC this Autumn. To inform the development of this change, we will shortly invite interested stakeholders to participate in a workshop, the timing and details of which will be confirmed and publicized alongside our response to the Ofgem document on the 6th of September, 2023.
Get involved
If you would like to find out more, submit feedback about the TPI Code of Practice, or register interest in attending the workshop on Change of Tenancy issues, please contact recco_strategy@retailenergycode.co.uk
In June and July, we hosted three workshops where we gathered feedback on the Code Manager and Enquiry Services. We wanted to ensure that both services meet the needs of our users and provide the best service. At the events, we asked what is working well, what doesn’t work currently and what users would like to see in the future.
We’ve now analysed all the feedback we received from these events. There weren’t any huge surprises – a key theme from all three events was that we should prioritise getting the fundamentals of each service right before we consider any expansion. Below, you can find out more about the feedback we received and how we will use this to inform our procurement projects.
The key feedback
Thank you to all the participants who attended our workshops. These events enabled us to gather more feedback than any other method. All the workshops highlighted the Code Manager service as a key area for us to focus on improving. In contrast, participants were largely happy with the current functioning of the Enquiry Services.
Considerations for the Enquiry Services
Online/Portal
The online/portal Users had a largely positive experience, with praise for the layout and information held. Workshop participants were agnostic as to whether the GES and EES should be consolidated as part of future procurement activity but strongly preferred a single log-on, with some support for a ‘dual view’.
Consolidating Enquiry Services
In response to the presentation of RECCo’s plans for the evolution of Enquiry Services and the introduction of an API Gateway, workshop participants agreed that API developers would see benefits in the use of an API Gateway, but this was tempered with a concern about any impacts this could have on existing users. This risk has been fed into our projects, and RECCo will ensure that we consider and mitigate user impacts as far as possible.
EES/GES Capacity
Some participants noted that even though switching activity is low, there is still significant demand on EES and GES API queries, with one participant noting that for every quote (before a Switch taking place), 6-10 API calls are required to the Enquiry Services. Although the Enquiry Services are coping well with current demand, there was concern that the capacity of the EES and GES would need to be increased quickly if Switching activity picks up. These volumetrics will be considered in future procurement activity, and we have initiated an investigation into the near/short-term impacts of increased switching activity and API usage.
Maintenance and Service Desk
Participants expressed a desire for a ‘one service desk’ approach. RECCo’s current operating model requires users to report incidents and issues to the individual Service Provider’s service desk for first-line support, and, if necessary, escalations can be reported via the REC Portal. It was suggested that some clarity on the incident reporting process would be welcome, and RECCo agreed to investigate how we could make the process more transparent.
How can we improve the Code Manager service?
We received a lot of feedback about the Code Manager, which we have summarised and divided into themes below. These themes are change and release management, general feedback, party management, performance assurance, stakeholder engagement and technology.
We are in discussions with the Code Manager to consider short-term improvements to each area of feedback that can be taken forward and consider longer-term changes that may need to be considered in future procurement activity. We will shortly share details with stakeholders on measures that will be taken forward immediately to address feedback received on the service.
Change and release management
The REC change process has not yet met our vision of being flexible and efficient. We aimed to reduce the burden on the industry to provide resources to drive changes forward but have not found the right balance between empowering the Code Manager to lead solution development and using expertise and insight from across the industry. We are encouraged to hear that stakeholders have welcomed the introduction of the REC Issues Group as a valuable forum to discuss key industry issues. You might have also noticed some movement on the Change Register as the Code Manager works to reduce the number of stagnant Change Proposals that had formed a backlog. Learnings from these recent activities are feeding into the Code Manager’s wider work to remodel and re-energise the REC Change process, which includes refining the approach to prioritisation, engaging wider industry where appropriate and developing more flexible paths to implementation so that whether a change is simple or more complex, it’s assessed through a process which is proportionate but continues to be robust. We’ll update you on the change process improvements in the coming weeks.
Workshop participants highlighted that the process for qualification and maintenance for some participants could be perceived as overly administrative and onerous. Qualification of market roles and maintenance of this qualification is an important function in the market to ensure market participants are operating to a minimum acceptable standard that does not pose a material risk to the market or consumers. However, we recognise the need for this activity to be proportionate and risk-based, as with all assurance activities. We will review this feedback and work with the Code Manager to identify potential process improvements and efficiencies.
Performance assurance
Our Performance Assurance Framework applies to both REC Parties and REC service providers and is designed to mitigate market risks and incentivise performance, leading to positive outcomes for consumers. A large part of this process includes collecting data from the industry from which the Code Manager draws insight. Stakeholders told us that the data request and submission process can sometimes be demanding and appear disproportionate to the risks identified. The Code Manager is reviewing its tools for requesting data to ensure that it’s only requesting what’s needed and that you can link this to the market risks we have identified.
It was pleasing to hear that most REC Parties highly value the support they receive from their Operational Account Manager (OAM). We heard that this service would also greatly benefit wider REC Service Users who do not currently have access to this service. So we are pleased to say that we are expanding the service/ Very shortly, Non-Party REC Service Users will be contacted to onboard with their OAM.
The large number and variety of parties within the market mean that not all REC activity is relevant to everyone, and we understand that parties would like to receive news and information tailored to their role within the industry. We are trialling shorter-term methods of helping you get to relevant information quicker through changes to the REC bulletin. We are considering how we can adapt the REC Portal to offer you a personalised view whilst exploring longer-term solutions to provide more targeted and relevant communications.
Technology
The REC Portal and EMAR are our digital products intended to allow you to self-serve and easily navigate your obligations and interactions with the REC. While stakeholders see benefits in principle, the current user experience is sometimes disjointed and falls short of being intuitive.
The introduction of the Digital Navigator has eased some of the navigational difficulties in EMAR, but feedback suggests that this can still be improved to make things easier for users.
Our primary focus is to review and improve the user journey across both platforms. Validating proposed changes and improvements with users will play a key role in ensuring these platforms can be successfully transformed. We will invite stakeholders to collaborate with us as this work progresses.
The next steps
The workshops provided a great opportunity to hear about and plan to address immediate issues. We have identified several short-term improvements to each feedback area that we are taking forward and will communicate further details on this shortly. However, we recognise that additional work may need to be done to assess the future requirements of both services, which is also being considered part of future procurement activity.