The Non-Domestic Market-wide Review & TPI Commission Transparency Explained

New TPI commission transparency requirements came into force on 1st October 2024. Here's what you need to know...

If you’ve been an energy broker for more than a few years, you’ll have noticed that the industry is becoming increasingly regulated, with numerous updates to broker and supplier obligations in recent years. 

However, whereas there are consumer protections in place for domestic energy customers (such as an energy price cap), business energy is entirely differently (and, if you ask us, something that Martin Lewis could do with clarifying next time he tackles the (domestic) energy crisis to help clear up some of the assumptions and misconceptions!). 

One area in particular that’s coming under increased scrutiny is commissions following the latest Micro-business and Market-wide TPI commission transparency Reviews. So in this article we’re going to provide a quick recap of what the changes are, why they were needed, and most importantly, what it means for brokers. 

A brief timeline of recent commission transparency updates 

  • In March 2022, following research conducted by Ofgem (suggesting that the majority of customers who use an energy broker are unaware of how brokers recoup their costs), the Micro-Business Strategic Review was published, following which, suppliers were obliged to provide “microbusinesses” with TPI fees in the customer’s contract (and on request) in an attempt to improve transparency in the energy market.
  • October 2023 saw the introduction of a new, voluntary Retail Energy Code of Practice for TPIs by the Retail Energy Code Company (RECCo – an Ofgem-created body to set up and oversee rules for operating in the retail energy sector) to improve governance arrangements for non-domestic energy brokers.  (This CoP is set to become mandatory at some point in 2025/26.)
  • Then, in April 2024 – the Non-Domestic Market-Wide Review introduced a new requirement that all non-domestic customers must be provided with information about broker commission fees, regardless of their size, to come into effect from 1st October 2024 (which is 6 months following the review decision, including the standstill period; meaning licence conditions will only apply on contracts signed on or after this date.) 

A quick summary of the Micro-Business Strategic Review (2022) 

The Micro-Business Strategic Review (2022) was a Statutory Consultation to modify the Supply Licence Conditions (SLCs) of all gas and electricity suppliers. 

It aimed to improve consumer protection and experience in the non-domestic energy market by implementing policy measures, including licence modifications and changes to complaints handling legislation.

Difficulty obtaining energy contracts, poor customer service, and unnecessary price hikes were all identified as issues that needed improvement.  

“The outcomes we expect to see from our changes are fairer treatment for all Non-domestic customers, better support, and improved transparency to empower customers.” – Ofgem 

Microbusiness classification 

As part of this review, it was stipulated that suppliers must take all reasonable steps to identify whether the customer is a micro business customer, and that they may decide to automatically treat the customer as a micro-business (based, for example on consumption). 

Under the Review, a non-domestic consumer is defined as a microbusiness if they: 

  • employ fewer than 10 employees (or their full time equivalent) and has an annual turnover or balance sheet no greater than €2 million; or 
  • uses no more than 100,000 kWh of electricity per year; or 
  • uses no more than 293,000 kWh of gas per year 

Further, a business will qualify as a micro-business for both gas and electricity if it meets the employee and turnover or balance sheet criteria.

If it doesn’t meet those criteria but uses no more than that the defined usage for either gas or electricity, it does qualify as a microbusiness for that fuel.

If it uses no more than the defined usage for both fuels, it qualifies as a microbusiness for both gas and electricity. 

Key outcomes of the Micro-business Strategic Review (2022) 

Following this review, new rules were brought in to improve customer experience, support, and transparency – including expanding the Standards of Conduct Guidance to all non-domestic customers and updating complaints handling standards.

Key outcomes of the review included:

  • Provision of Principal Contractual Terms – Suppliers must advise customers of the costs associated with the contract they are entering 
  • Brokerage Cost Transparency – Commission transparency will be shown to customers when they receive their Principal Terms (Suppliers include commission details on Principal Terms and on contract documents as a total commission value) 
  • Broker Dispute Resolution* – To submit a contract to a supplier all TPI / Brokers must join the Ombudsman Alternative Dispute Resolution (ADR) scheme  

*As a result of this, we (OnlineDIRECT) registered to the Energy Ombudsman Scheme, and stopped processing contracts for any brokers that had not completed the application and been accepted by Energy Ombudsman Services, and on the Approved List of Brokers. 

 

 

A quick summary of the Market-wide Review (2024) 

Following on from the initial review, the Non-Domestic Market-Wide Review sees further changes come into effect throughout 2024, with the goal of ensuring fair treatment and better support for all business customers, regardless of their size.

  • Expansion of the Standards of Conduct to apply to all businesses of any size, (rather than just Micro Business customers) – giving Ofgem powers to take action against suppliers that do not treat non-domestic customers fairly 
  • Introduction of a new supply licence rule for non-domestic suppliers which requires them to signpost Micro Business and Small Business customers to Citizens Advice and Citizens Advice Scotland, who can offer support and advice when they have an issue 
  • Expanding the requirement for Principal Terms to clearly display any broker fees from Micro Business customers to all non-domestic customers – this will apply to contracts signed on or from 1 October 2024 and suppliers must make this information available upon request. 
  • A requirement for suppliers to only work with Third-party Intermediaries (TPIs) that are members of a redress scheme when securing Small Business contracts – which will help businesses achieve fair and suitable outcomes when working with brokers 

(If you’re an energy broker that’s not registered with the ADR scheme, we can help – get in touch with our compliance team to find out more). 

So, what does this all mean for brokers? 

What the Market-wide Review & TPI Commision Transparency updates mean for Brokers 

Put simply, these updates mean all non-domestic energy customers, regardless of size, will be able to see what their broker is charging for their service. 

In practice, this means brokers need to: 

  • Disclose the uplift to all businesses 
  • Give full disclosure and the uplift before the contract is signed for micro- and small businesses 

Unfortunately, as is often the case in the energy market, there doesn’t appear to be a “standard” response from the energy suppliers, who (from what we’ve seen so far at least), are all taking a slightly different approach to how and where TPI commissions are disclosed on customer contracts. 

How we’re supporting Brokers with commission disclosure 

Although we’re not able to do anything about this directly, what we can do is make sure that you have all the information and support that you need if and when you receive push-back from customers.  

We’ve done all the hard work for brokers (and suppliers) to keep everyone compliant, updating the energyengine® to ensure that contract documents are all mapped to the relevant fields, as well as tweaking our suggested sales scripts to help ensure you’re using the correct wording for SME energy sales (suppliers will send relevant document for bespoke contracts). 

We’ll also be keeping the Supplier Tabs updated with further information as we get it but encourage brokers to contact their account managers to help with specific conditions and suppliers. 

Learn more about our quality standards and “Ways of Working”

Demonstrating value for money energy brokerage 

With the question of “what exactly are we paying you for?” increasingly likely to come up, it’s also worth considering what your response is going to be.  

It goes without saying that we hope all of our Brokers are delivering a high-quality, value-adding service to their customers (if you’re not sure what our standards are, we’ll happily share our tips on brokerage best practices).  

But for those of you looking to go the extra mile, offering your customers additional products and services (beyond the standard gas and electricity) is something that our data shows is proven to drive long-term customer value and satisfaction.  

Water in particular presents a quick-win opportunity, as does Waste (albeit with a slightly more complex quoting process). Energy analytics and smart metering are also becoming increasingly popular as businesses look to get ahead of the market-wide switch to half-hourly settlement on the horizon. 

Environmental/sustainability services are also growing in interest, and we’re here to help make the process as easy as possible – both for you and your customers. We can also support with ESOS, SECR and broader NetZero transition reviews, and even EV charging and Solar installations. 

We’ll be sharing more information about all of our additional products and services in the coming months, or contact our Additional Products & Services Team who’ll be able to talk you through the details if that’s something you’re already keen to learn more about. 

In the meantime, if you find yourself coming up against any particular objections relating to commission fees, we’re here to help. Just get in touch with your Account Manager, or contact our New Business Team if you’re not already working with us. 

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.