Britain's government wants direct oversight of energy brokers and price comparison services by the Office of Gas and Electricity Markets (Ofgem), aiming to curb commissions that can distort customers' contract choices.
The Guardian reported Wednesday that the Energy Independence Bill would include measures on brokers and executive bonuses. It reported that broker changes could save businesses more than £100 million a year by addressing hidden commissions and mis-selling.
The government has separately proposed regulating intermediaries that arrange energy contracts for households and businesses. Its plan would require Ofgem authorization, with a phased registration process for existing firms. The regulator could order compensation for customers, fine intermediaries and exclude firms from the market.
Ofgem already has authority to fine licensed energy companies and require them to compensate customers. The proposal would extend direct oversight to the firms that help customers choose and arrange contracts.
The government cited brokers that concealed commissions or requested offers only from favored suppliers. It said commission arrangements can reward intermediaries for recommending a favored supplier instead of serving a customer's interests. Small businesses and charities are among those it says would gain protection. Regulated intermediaries would primarily cover oversight costs through annual fees.
A separate government review in April proposed giving Ofgem the power to direct companies to prevent or recover senior executives' performance-related pay after extremely serious breaches. Any such sanction would require a completed Ofgem investigation finding the licensed company responsible. The review said Ofgem should consult on the regime before introducing any bonus sanctions.
The review cited water-sector bonus rules as a precedent. Parliament's published summary describes the bill's energy regulation provisions broadly, without specifying broker penalties or the threshold for restricting bonuses. Energy Secretary Miatta Fahnbulleh is scheduled to present the bill on Wednesday, Nov. 4.
