A Broker's Guide to Alternative Dispute Resolution & Energy Broker ADR Schemes

Reaction to mandatory ADR schemes for Energy Brokers

Brokers’ initial reactions to the introduction of this mandatory ADR scheme was mixed. Although there was – and still remains – a desire for industry improvements from many brokers keen to increase professionalism in the sector, a large number of brokers left the industry as a result of its rollout.  

A few years in and some common gripes still persist. In particular, the annual registration fee (£300 + VAT) is seen to disproportionately affect smaller brokers and sole traders.  

However, it is now an accepted practice that if you want to offer energy brokerage services, you’ll need to be registered to an ADR scheme. Indeed, at OnlineDIRECT, it is a prerequisite of any brokerage looking to utilise our energy pricing services or software that they be registered with an Ofgem-recognised ADR Scheme before we accept them into our Broker Community. 

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ADR Schemes for Energy Brokers

Until recently, there were only two ADR Schemes available to Energy Brokers: the Energy Ombudsman (EO) and the Utilities Intermediaries Association (UIA). However, as of 1st November 2024, the Dispute Resolution Ombudsman (DRO) now offers a further option for Energy Brokers and Third-Party Intermediaries (TPI) to sign-up to. 

• Energy Ombudsman (EO): The primary ADR body in the energy sector, offering independent dispute resolution services between energy suppliers, brokers, and consumers. The EO’s Energy Broker Register is publicly available and details all additions and departing brokerages. 

• Dispute Resolution Ombudsman (DRO): The DRO is an independent, not-for-profit, government-approved organisation that offers a free and expert adjudication service for unresolved complaints about Energy Brokers that have committed to its qualifying scheme. 

• Utilities Intermediaries Association (UIA): Established in 2006, yet perhaps less well-known than the others, the UIA is a trade body for TPIs in the UK business energy sector which Ofgem has also accepted as meeting the criteria of a complaints process. 

Key features of Energy Broker ADR Schemes 

All Ofgem-recognised schemes provide a similar set of assurances and benefits. However, as it’s the most widely recognised – and the scheme that OnlineDIRECT is signed-up to – the features listed below are based on Energy Ombudsman ADR Scheme: 

• Impartial and independent resolution: an independent platform for resolving disputes, ensuring a neutral approach that doesn’t favour either the broker or the customer 

• Transparency and fairness: Schemes are structured to create transparency around TPI practices, promoting fair dealings and clear communication with customers 

• Accessible for microbusinesses: ADR schemes are specifically designed to be accessible for microbusinesses, often with simplified processes that make it easy for smaller entities to engage in the process without legal assistance 

• Mandatory Broker registration: Energy brokers who want to work with suppliers must register with an approved ADR body, ensuring accountability and professional standards 

• Final and binding decisions: Once a decision is made by the ADR body, it is binding, which ensures that both parties have a clear resolution to their dispute 

• Free or low-cost for customers: Many ADR services are provided at no cost or minimal cost to the customer, reducing the financial barrier to accessing resolution services

Alternative Dispute Resolution benefits for Brokers 

Although ADR schemes primarily exist to protect consumers/businesses in their dealings with energy brokers, there are benefits for Brokers, too. 

• Increased trust: As all brokerages are now held to the same standards, trust and confidence in the energy broker industry has grown, and more positive relationships are being formed between brokers and their microbusiness clients 

• Streamlined complaints process: The scheme provides a clear pathway for issue escalation, making it easier for brokers to understand best practice and process in cases where clients have complaints/disputes – which itself provides a framework for service and process improvement

• Potential (further) industry-wide improvements: Insights gained from dispute resolutions can be used to inform policy and address industry-wide issues, potentially leading to broader improvements in the energy broker sector 

Common examples of Energy Broker disputes requiring ADR intervention 

Alternative dispute resolution schemes play an important role in the energy brokerage industry, providing impartial and approved dispute resolution process for conflicts that arise between energy brokers, suppliers, and microbusiness customers. 

There are many reasons why a business energy customer may need to take a complaint to an ADR scheme for resolution. For example: 

• Contract disputes – such as misrepresentation of Terms (e.g. pricing, duration, or cancellation policies), or mis-selling of contracts (for example, by providing inaccurate information or pressuring the customer into an unsuitable deal) 

• Contract switching disputes – such as unauthorised switching or delays in switching which result in monetary loss to the customer  

• Service quality issues – either where there is a perceived substandard service (including lack of responsiveness or failure to address concerns), or a failure to provide promised services (such as regular market analysis or contract management) 

• Breach of industry regulations – where a broker is accused of not adhering to Ofgem regulations or industry standards 

How the Energy Ombudsman ADR process works 

Each ADR scheme has its own specific process. As it’s the most widely in use, here’s a quick outline of what you can expect if you sign-up to the Energy Ombudsman Scheme.

1. Customer attempts to resolve the issue directly with the broker/supplier 
2. If unresolved after 8 weeks, or reaching a deadlock, the complaint can be escalated to the Ombudsman 
3. The Ombudsman reviews the case and makes an impartial decision based on the evidence presented (from both sides), the outcome of which is considered final and cannot be appealed 

Once a complaint is escalated to the Ombudsman, the Broker/TPI has the opportunity to respond, with any evidence to support their case. This includes: 

• Whether you feel the complaint is justified and an explanation of your reasoning 

• A summary of what your response has been to the complaint so far including any offers made and any supporting evidence 

• An outline of any industry/company specific arrangements, guidelines and/or legislation which you are seeking to rely on as part of your response, and how you consider these apply in the circumstances  

• Any other information or evidence that relates to the complaint that you would like to be considered as part of the dispute resolution process 

Potential outcomes of a complaint 

Having reviewed the case, the outcome of this decision is usually one of the following, but in some cases may be a combination: 

• The direction to take practical action (e.g. credit or cancel an account, change your tariff) 

• Make an apology 

• Offer a financial award 

• Make recommendations to prevent the issue happening again 

How to join an Energy Broker ADR Scheme 

Each of Ofgem’s approved ADR schemes (Energy Ombudsman, UIA, DPO) has their own application process.  

Details of how to apply can be found on their respective websites. As a minimum requirement, you’ll need to provide: 

• Some general information about your brokerage (inc. registered and trading names, type of customer you serve) and the services you provide 

• A copy of your company complaints procedure 

Your chosen ADR scheme will provide you will information and resources to help you understand and comply with the scheme (including best practice advice on how to avoid disputes), and also some assistance with the application process. 

Help for brokers applying for or renewing membership to an ADR Scheme 

For energy brokers or those interested in support with joining the ADR scheme or other related programs, please reach out to our specialist team for guidance and assistance. 

Already working with us? Join us for an exclusive Broker Success webinar on 22nd January 2025 as we unpack some recent regulatory changes and updates to our “Ways of Working” documents. There’s also a chance to have your questions answered by our Compliance experts during the session. Register your interest in joining the webinar.