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UTILITY WEEK | 17TH - 23RD FEBRUARY 2017 | 29 Markets & Trading Ombudsman Services in the energy market oen relate to broker behaviour rather than supplier behaviour, says energy ombuds- man Debra Vaughan. But, as it stands, the watchdog has no means to report or redress these issues. Oen suppliers end up in the frame, even if they are not to blame for the complaint. Some of the issues the ombudsman comes across concern the legal requirements of what is recorded during the sales conver- sation between a broker and a customer. Only certain parts of that conversation have to be recorded to confirm that a contract has been agreed. Vaughan says this means that, oen, retailers "don't know what sales bluff there has been before that. The supplier gets a copy of the sales contract call recording, and when we get that in evidence with a complaint, we can sometimes hear reference that the customer makes to an earlier conver- sation. It is clear from that that something has happened that isn't really playing out properly in the contractual part of the call." Vaughan says broker regulation would give an important boost to consumer confi- dence. "Separating out the two parts of the energy market which are otherwise linked, and putting a clear responsibility on each area, should help improve customer aware- ness and confidence in the companies they use," she says. Ombudsman Services has also recommended that energy suppliers ask for the full call to be recorded, and Vaughan says water companies should prepare to do the same. The integrity and transparency of bro- ker activities is just one of many issues in the mire of the utilities sector. But if cus- tomer experience is at stake, it is one which deserves more than sticking plaster solutions. A clear signal from government on its view of the need for formal broker regula- tion would be helpful. Until this happens it is up to utility suppliers to impose what con- trols they can on broker behaviour and guard customers from rogue dealers. Whether that is achieved through a voluntary code of con- duct or by insisting that calls are recorded, Vaughan suggests that the sector should "do it sooner rather than later". Insurance brokers Insurance brokers are regulated by the Financial Conduct Authority (FCA), which replaced the Financial Services Authority in 2013. To operate in the insurance market, a broker must gain FCA authorisation and be put on the Financial Services Register; otherwise it is put on the "unauthorised firms list". In March last year, small brokers reportedy told trade publication Insurance Age that the burden of regulation could push them out of the insurance market, which would ultimately limit consumer choice. In a debate about regulation and the FCA in Parliament in February 2016, Conservative MP for North Warwickshire Craig Tracey said that the regulator did not fully understand the insurance industry. "It's not that we don't want regulation at all, but it has got to be proportional to the threat that we pose," he explained. "I think the overriding message of the debate was that the FCA isn't doing its job." " "Regulation is necessary for TPIs, because a voluntary code is never going to be fully effective. That is true in energy, and we've already seen signs of mis-selling in water, and the market isn't even open yet. The only way it can be effective is to have regulation – light-touch regulation, but regulation nonetheless." MIKE LEE, WATER SERVICES MANAGER, INPROVA "We are more than happy with a voluntary code of conduct for brokers. The trouble is that many of the codes of conduct end up being rather lame and, therefore, why wouldn't you sign up to them? "If you're going to have a code of conduct it needs to have meaning and bite, and make people nervous about signing up to it; that is when I think there is value in them. There's no point having a voluntary code that just says 'I'll be nice to you.'" DAVE COCKSHOTT, CHIEF COMMERCIAL OFFICER, INENCO "Energy brokers should be, and should have been, regulated by the Financial Conduct Authority or Ofgem. At the moment, they aren't, and this has encouraged some of the most dreadful customer service I've ever seen. I call them Flash Harry business tactics, and they are at play in the energy market every single day." PETER SCEATS, CO-FOUNDER, GRAND UNION WATER COMPANY "This is a wide-ranging subject which involves many facets of the water industry. It needs covering and addressing I agree, but who or what regulatory body could audit these deals? I feel it's best to see what happens to the market by the end of this year and address any glaring issues then." GRAHAM MANN, SENIOR PARTNER, H2O BUILDING SERVICES "The involvement of TPIs in the business retail market could provide many direct benefits to customers and support market development by facilitating higher levels of customer engagement and potentially encourage a multi-utility market. But there is a risk that the activities of some TPIs may cause customer harm, especially to smaller business customers." OFWAT (IN ITS VOLUNTARY CODES CONSULTATION) Next month Utility Week will be running special in-depth coverage of brokers in the utility industry. " BROKER SPECIAL COVERAGE