Non-domestic Review: How should you prepare for change?

Non-domestic energy customers will be entitled to better customer service, more support resolving disputes, and greater transparency in a raft of new measures announced by Ofgem. And be aware – it wants action fast.

Measures will come into force as early as 1 July 2024, after Ofgem stepped in to tackle ‘concerning behaviour’ seen since the beginning of the energy crisis. It resulted in a market that ‘wasn’t functioning as expected’, addressed in a recent review, where new expectations were outlined to create fairer conditions for non-domestic customers.

This latest announcement has made one thing clear – Ofgem is expecting to see an improved customer-centric focus from the C-Suite down. We’ve looked closer at exactly what this means for suppliers, outlining the immediate actions needed to get equipped for a change in market conditions.

What does this cover?

1. Treating customers fairly

Businesses of any size will be covered under the Standards of Conduct supply licence condition (SLC 0A) from 1 July 2024, having previously supported solely micro businesses.

As in the domestic market, suppliers will now be expected to demonstrate an outcomes-based approach, which places greater consideration on the customer throughout servicing journeys and decision-making, including collation of supporting evidence.

What next?

• Review processes to identify any that fall short of new standards.
• Introduce and/or increase compliance monitoring.
• Enhance customer service arrangements - which may include increasing or upskilling staff.

2. Expansion of Complaints Handling Standards (CHS) to small businesses

From December 2024 the Complaints Handling Standards will cover small businesses as well as micro businesses.

It’s a significant change – one that will prescribe how complaints should be handled for a large number of customers. Our analysis suggests this equates to ~220k businesses, requiring proactive action from suppliers throughout the rest of the year, to develop the required maturity for increased complaints demand.

The aim is to deliver consistent expectations for complaints among non-domestic customers, in line with domestic standards, of which Ombudsman referrals play a key role. From December, suppliers must signpost small businesses to the Ombudsman after eight weeks, or earlier if they deem there’s no more they can do to resolve the issue.

What next?

• Evaluate complaints practises and standards
• Understand your existing process performance and look for areas of opportunity to improve same day resolution to reduce the overall risk of costly ombudsman involvement

3. Increasing uptake of consumer support

Under a new license condition, suppliers will be required to signpost small businesses to support bodies like Citizens Advice, while continuing to do the same for micro businesses, now with a formal expectation.

Ofgem says there’s little awareness of support available, so improving signposting will widen support for issues such as complex servicing complaints and potential disconnections – with the change due from 1 July 2024

What next?

• Consider a full signposting review across all relevant channels.
• Ensure there are signposts at appropriate points in the customer journey.
• Introduce new communications or prompts where any gaps are identified.

4. New rules for registered third-party intermediaries (TPIs)

From December, suppliers selling to small businesses can only work with brokers who are registered with the redress scheme, widening the scope of a rule which previously only applied to micro businesses.

The aim is to reassure customers they can access dispute resolution schemes following concerns of poor TPI practice, such as mis-selling or pressurised selling, and drive better service and fairer prices for the increased number of businesses now in the scope.

With an estimated 222,000 non-domestic customers covered in this measure, according to our projections, we predict TPIs will incur extra compliance costs across a wider range of customers which may influence the end price offered to the market.

What next?

• Review existing TPI relationships to ensure all are registered with a Qualifying Dispute Settlement Scheme (QDSS) or identify any gaps and areas of risk.
• Ensure policies include a QDSS registration check when working with new TPIs.

5. Added responsibility for transparent pricing

All non-domestic contracts must clearly display broker fees on any contracts signed on and from 1 October 2024. This was previously just applicable to micro businesses and represents a step toward tackling the widely reported poor behaviours from some of the TPI market.

A cost per unit presentation of TPI service fees must be provided to all non-domestic customers via their principal terms. This requirement does not extend to bills provided to non-domestic customers.

Suppliers must note that it’s themselves, not TPIs, who bear the responsibility for communicating these fees.

As a result, customers will gain an insight into whether brokers have been acting in their best interests. But note, it’s the supplier who’s most likely to feel the initial impact, with a potential raft of inbound contact from less savvy customers wanting to know why an Xp uplift has been added.

What next?

• Examine and update principal terms to provide the required transparency.
• Get ahead of any potential demand by understanding which customers it may come from, using segmentation and proactive engagement to manage the impact.

Assessing the impact – Are you equipped for change?

With all of these measures, suppliers are likely to need to assess processes and develop the customer service offering, which may require more staff to support new procedures and ensure compliance.

To best deliver on this, suppliers need to ingrain the customer into the heart of their processes, from design to delivery.

There may also be an increased burden on regulatory and compliance teams when providing evidence to support decision making, specifically in relation to Standards of Conduct.

If you need more information on the changes and what it means for your teams, contact Rachel Littlewood.