ADR Scheme

TPI Alternative Dispute Resolution (ADR) Scheme

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TPI Alternative Dispute Resolution (ADR) Scheme
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Microbusiness Strategic Review, ADR and how UK businesses are being supported in energy purchasing

The aim of the ‘Microbusiness Strategic Review’ is to provide better, fairer energy agreements for microbusinesses in the UK. Based on consumer feedback and research, Ofgem have introduced guidelines and restrictions for TPIs/ Brokers and energy suppliers to support microbusinesses when procuring energy.

Initiated in mid 2022, there are several elements of the overall scheme that are now active, which will contribute to wider aim of providing a better experience to microbusinesses within the energy industry.

What are the discounts on the Energy bill relief scheme?

What do these new measures mean for you, your business, and the industry?

The Microbusiness Strategic Review is a combination of several measures put in place by Ofgem. These measures include Faster More Reliable Switching (FMRS), an Alternative Dispute Resolution scheme (ADR), fee transparency and the removal of termination notices. The aim is to provide protection, support and guidance when navigating the energy market.

Due to the current turbulence of the energy market, the Microbusiness Strategic Review is more important than ever. The main goal of the Microbusiness Strategic Review is to enhance the experience of microbusinesses in the energy market.

Further information and guidance have been made available for microbusiness owners, making it easier to understand energy contracts, fees, and terms.

Who is covered by the Microbusiness Strategic Review?

As this scheme is for microbusinesses only, here is the outline of what the government define as a microbusiness:

  • A business that employs fewer than 10 employees (or their full-time equivalent) and has an annual turnover or balance sheet no greater than £1.7 million; or
  • A business that uses no more than 100,000 kWh of electricity per year: or
  • business that uses no more than 293,000 kWh of gas per year

 

Outline of the Microbusiness Strategic Review

  • Faster more reliable switchingOfgem has driven a programme whereby non-domestic customers should be able to switch within 2-4 working days. This provides a significant reduction in switching time for microbusinesses as it would usually take 15 working days to switch gas and 10 days for electricity.
  • Alternative Dispute Resolution (ADR) Scheme – There is a new requirement for suppliers to only work with brokers who have signed up for a qualifying ADR scheme. This scheme will be run by the Ombudsman service and will act as an impartial mediator for disputes regarding contracts and agreements. ADR will support positive change within the energy industry, helping brokers/suppliers to improve their service and customer experience.
  • Fee transparency – Brokerage costs must now be provided to microbusinesses via principal terms. Suppliers will need to present this as a total cost in pounds covering the duration of the contract. This will provide certainty to microbusiness owners on precisely what they will be charged.
  • Removing termination notices – Ofgem has stated that microbusinesses will now no longer need to provide termination notices for their contracts. This provides microbusinesses with the ability to secure a new contract without the legal requirement of providing a termination notice, making switching easier.

Why work with a Third-Party Intermediaries (TPI)/Broker?

Third-party intermediaries, or TPIs, and Brokers provide choices for customers and create rivalled competition in the market. The Competition and Markets Authority has regularly flagged choices to consumers through price engines and third-party providers is critical in maintaining competitive markets.

With the support, insight and connections a TPI/Broker can provide, you can get direct access to a vast range of UK energy suppliers and their exclusive quotes only offered to those Brokers with a Premier relationship status. This leaves you with time to get back to what you do best – running your business.

TPIs and Brokers have driven 50% of non-domestic energy switching activity and this continues to grow. Fuelling competition in the market places the onus on suppliers to offer better prices, packages, and services to their business customers. The activity undertaken by TPIs/Brokers strengthens this competition and gives you a thorough understanding of the scope of the market and this is useful when choosing your next supply.

A reputable TPI/Broker will act as your knowledge hub for all things energy. They will help to assist you with any supplier issues, plan any required meter changes and offer you unbiased advice on the current energy market.

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How do TPIs/ Brokers get paid?

Many contracts facilities by brokers have mandatory fee disclosure – and a significant number of companies fall into the definition of micro business. The services provided by a TPI/Broker are chargeable, and the way that they charge can be different for different amounts but typically, an uplift is added to the contract and the supplier pays the TPI/Broker directly. Any reputable brokers will be clear with their customers up front on how they operate and how much they change. Broker’s fees are usually spread over the energy contract – making them better for companies’ cash flow. Our fees are typically 1p per KWH which represents less than 3% of a typical power contract – using a current base price of 30p per KWH.

If you are unsure or unhappy with the amount being charged, we recommend gathering several quotes from different TPIs/Brokers to assess which company will work best for you against the value they are charging.

How to choose a reputable Broker?

Third-party intermediaries and energy brokers must be registered to the ADR scheme to work with microbusinesses. Any reputable energy brokers will be transparent with their customers on how they operate and how much they charge.

To identify if you are dealing with a reputable broker, customers should check their terms and conditions, industry awards and accolades, number of years trading, number of customers, fees, and online reviews. It is worth doing the research to ensure you are going to receive the service and support you need.

Why work with Utility Bidder?

With 13 years of experience, Utility Bidder has helped over 70,000 businesses across the UK. Our energy expert’s actions are customer-centric and committed to always providing our award-winning customer service, value for money and comprehensive knowledge. Utility Bidder is ADR registered and rated Excellent on Trustpilot with more than 2,000 reviews from our customers.

Over the past 10 years, we’ve built strong relationships with the UK’s leading energy suppliers to simplify the switching process for our customers, drive through better offers and allow our customer base to take advantage of the breadth of the market in one place.

We are extremely proud to have won “Consultancy of the year” at the 2022 TELCA awards and be highly commended at the 2022 Energy Awards. Utility Bidder is built on values of unrivalled customer service, alongside a determination to offer above-and-beyond value to our customers. We aim to always act right, either by looking to build long term relationships from the moment we’re in contact, to being at the forefront of industry conversation to bring about further protection for our customers.

Disclaimer: Views contained on this page are Utility Bidder’s however they do not constitute certainty of market movements. Energy prices are volatile and could go up or down.

Frequently asked questions

Firstly, you should contact the TPI or Broker to try to resolve the issue directly. If a resolution has not been presented by the 1st of December 2022, you are allowed to take your complaint free of charge to a TPI Alternative Dispute Resolution scheme when:

• You have reached a “deadlock” position, where the parties involved aren’t able to agree on a resolution
and have reached the end of the complaint process; or

• An agreement has not been made within 8 weeks
Currently, the Ombudsman Services is the lone provider, but other providers may emerge in the future.

The Ombudsman has stated they are willing to investigate a complaint against a Broker if the customer was not aware of the event they are complaining about until after 1st December 2022. Only in situations where the event that gave rise to the complaint happened before 1st December, but the customer only became aware of it after the 1st of December.

Unfortunately, the current ADR scheme only applies to complaints from microbusiness customers.

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