Micro Business Strategic Review update

An overview of the changes

By now you will have no doubt seen the results of the long awaited decision in relation to the Micro Business Strategic Review. Ofgem estimates that 95% of business in the UK are classed as a micro business, so these changes will no doubt have a huge impact on how suppliers and Third Party Intermediaries (TPIs) operate.

The MBSR was launched on 3rd May 2019, framed by a concern that micro business customers were finding it hard and costly to engage in the market to find a better deal. The market, and the practices of TPIs, was reviewed in line with this model and changes were drafted with a final decision published on 28th March 2022. There are several adjustments to take note of before 1st October 2022:

  • The removal of any requirement to provide termination notice for a micro business contract, except in the case of Evergreen Contracts.
  • Clarity around the requirement for suppliers to provide a Statement of Renewal Terms on or about 60 days before the contract end date.
  • A requirement to disclose and publish within the Principal Terms for micro businesses (brought to the attention of the consumer pre-contract), the total pounds sterling commission to be paid to any TPI over the lifetime of the contract (actual or estimate where an actual is unknown).
  • The Principal Terms of the proposed micro business contract must be brought to the attention of the consumer before entering into the contract. For verbal contracts Ofgem does not consider “signposting a consumer during a verbal sale (e.g. via an email or SMS sent during the call) to a set of Principal Terms as sufficient”, and expect that this information be plainly communicated as part of the call.
  • The licence still requires suppliers to take all reasonable steps to provide a written copy of the Principal Terms, along with a Statement of Renewal terms, within 10 days of entering or extending the duration of a micro business contract.

The final change, requiring suppliers to only work with TPIs signed up to a Qualifying Alternative Dispute Resolution Scheme (ADR), is to be introduced from 1st December 2022. For more information on how to register for the scheme please visit www.ombudsman-services.org/sectors/energy-brokers

 The qualification criteria for micro business consumers, and the license obligations for suppliers to take all reasonable steps to identify them when entering or extending a non-domestic contract, remains unchanged. Crown Gas & Power is making the necessary changes in preparation for the new licence obligations.

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