Ofgem preparing to regulate energy TPIs
Ofgem Is Preparing to Regulate Energy Brokers: What Businesses Need to Know
The government intends to bring energy brokers and other third-party intermediaries under direct Ofgem regulation. The final rules are not in force yet, but Ofgem has already published the standards it wants the sector to start working towards.
Existing protections apply, but brokers are not yet directly authorised and supervised by Ofgem.
Primary legislation is still required before Ofgem receives the full new powers.
Ofgem has set out practical behaviours around quotes, commission, complaints and fair value.
Once the future regime is built, TPIs are expected to need Ofgem authorisation to operate.
Energy brokers are not directly regulated by Ofgem today, but the market is clearly moving towards direct regulation.
The government has confirmed that it intends to appoint Ofgem as regulator for third-party intermediaries, usually called TPIs. Ofgem is now reviewing the market and has published good-practice principles that intermediaries can start following before the formal regime exists.
That matters to businesses because the future rules are expected to affect how brokers explain their role, which suppliers they compare, what customers pay, how contracts are presented and what happens when something goes wrong.
Energy broker, consultant, comparison service: the label matters less than the activity.
Ofgem uses the term Third-Party Intermediary for businesses that sit between a customer and an energy supplier when helping to find or arrange an energy contract.
That can include energy brokers and consultants, price comparison services, auto-switching providers, bill-splitting services and other businesses involved in energy procurement.
The government's intended framework is activity-based. In other words, calling a business a "consultancy" rather than a "broker" would not, by itself, be expected to take it outside future regulation if it is carrying out regulated energy procurement activity.
Most broker users are satisfied. The problem is inconsistent standards.
The debate is more balanced than the usual "all brokers are bad" headlines suggest.
Ofgem's latest business research found that 35% of businesses had used a broker and, among those businesses, 72% were satisfied with the service. Positive feedback included knowledge, responsiveness, access to deals and not having to deal with suppliers directly.
At the same time, Ofgem and government work has identified concerns in parts of the market around lack of transparency, mis-selling, hidden commissions, pressure selling, unclear supplier coverage and poor access to help when something goes wrong.
A good intermediary can help a business navigate suppliers, contract structures, timing and account issues that would otherwise take significant time and expertise.
The future regime is intended to create more consistent standards across the sector, rather than assuming every intermediary currently operates in the same way.
Businesses already have some protections before direct broker regulation arrives.
It would be wrong to suggest the current market has no rules at all. A number of existing protections already sit around business energy contracts and the way suppliers work with intermediaries.
For non-domestic contracts signed from 1 October 2024, principal terms must clearly display fees paid for third-party services such as energy brokers.
Ofgem expanded supplier Standards of Conduct across the non-domestic market, strengthening expectations around fair treatment of business customers.
Supplier rules require qualifying brokers used to secure Micro Business and Small Business contracts to participate in an appropriate redress scheme.
Direct Ofgem regulation will sit alongside, rather than replace, wider legal requirements covering matters such as misleading practices, data protection and contractual conduct.
The key difference with the proposed future regime is that Ofgem would gain direct powers over TPIs themselves rather than relying primarily on supplier licence conditions and other indirect protections.
The clearest clue to where regulation is heading.
Ofgem says its July 2026 good-practice principles are not enforceable TPI rules. They are its current view of what good looks like.
Ofgem has asked intermediaries to start aligning their day-to-day processes with a set of practical customer outcomes now. These principles are particularly useful for businesses because they show the questions a good procurement process should already be able to answer.
The customer should understand who the intermediary is, what service it provides and the nature of its relationship with suppliers.
Ofgem says intermediaries should make clear whether they searched all suppliers or only certain suppliers when finding offers.
Quotes should be up to date, presented accurately and accompanied by the principal terms before the customer agrees.
The service being provided should be explained clearly, so the customer knows what support to expect before and after the contract is signed.
Ofgem says commission or fee arrangements should be explained clearly, including how much the intermediary receives and how the customer ultimately pays it.
Sending information is not the whole job. Ofgem's good practice says intermediaries should check the customer understands what has been explained.
A clear complaints process and fair, prompt handling are part of the outcomes Ofgem wants customers to receive.
Ofgem says the price charged for an intermediary's service should reflect fair value relative to the service and benefits being provided.
Commission is not the problem by itself. Hidden or poorly explained commission is.
Supplier-paid commission is a common way commercial energy brokers are paid. The important question is whether the customer can understand what the broker is earning, how the charge reaches them and what service they receive in return.
The government's work on future regulation specifically identifies lack of transparency around fees, supplier coverage and commission incentives as areas that can distort customer decisions.
Ofgem's current good-practice guidance does not announce a universal commission cap or ban supplier-paid commission. It focuses instead on transparency and fair value while the detailed regulatory framework is developed.
Authorisation, monitoring, redress and the ability to remove bad actors.
The final rules have not been written, but the government's intended framework is already clear on the broad powers it wants Ofgem to have.
The proposed regime would require TPIs carrying out regulated energy procurement activity to pass an Ofgem registration or authorisation process.
Ofgem is expected to set high-level principles and then develop more specific requirements governing TPI behaviour.
The government intends to give Ofgem powers to request information, investigate suspected problems and monitor the market directly.
The proposed enforcement toolkit includes customer redress, substantial financial penalties and exclusion from the market for serious or repeated misconduct.
Once Ofgem has been legally appointed and has built the registration process, the government currently expects a 12 to 18 month sunrise period for existing TPIs to become authorised. The exact sequencing will ultimately be determined by Ofgem.
There is no confirmed date when every broker suddenly becomes Ofgem regulated.
Ofgem launched its formal market review in June 2026 and says it wants to complete that review during 2026. It has said that in 2027 it will set out its starting ideas for how effective regulation could be targeted and seek views on those proposals.
Formal appointment of Ofgem as the regulator still requires primary legislation. The government has said it will bring that legislation forward when parliamentary time allows.
So this is a real and significant change, but it is a process rather than an overnight switch. Businesses should be wary of anybody presenting future Ofgem regulation as if every detail is already settled.
Five questions worth asking any business energy broker now.
Ask for the scope of the search. Do not assume phrases such as "market comparison" automatically mean every supplier in Great Britain.
Ask for commission or fees in writing before agreeing to the contract, and make sure you understand how the cost reaches your bill.
Check supplier, rates, standing charges, contract term, start date, renewal terms, termination conditions and any early exit provisions.
For qualifying Micro Business and Small Business customers, check the broker's redress arrangements and complaint route.
Ask whether the broker remains involved with billing, metering, Change of Tenancy, complaints and supplier queries, or whether the service effectively ends at the sale.
How Smart Energy is already aligning with the direction Ofgem is taking.
The future rules are not final, so we do not claim to be "compliant with future Ofgem regulation". What we can show is how our current process lines up with the behaviours Ofgem is now encouraging.
Where commission is included within an energy contract, we show it before you agree to proceed.
We compare options across 28+ UK suppliers. We do not claim access to a supplier if we cannot quote them.
Our recommendation should come down to the commercial fit, not which supplier happens to pay us more.
The contract is not the end of the relationship. We continue to support clients with supplier, billing, metering and account issues afterwards.
Smart En Co Ltd's company details, data-protection registration and active Energy Ombudsman membership can be independently verified.
Plain-English answers.
Are business energy brokers currently regulated by Ofgem?
Not directly under the future TPI authorisation regime. Existing supplier licence conditions, contract transparency requirements, redress rules and wider law already affect the market, but Ofgem does not yet directly authorise every energy broker.
Will energy brokers need an Ofgem licence?
The government's intended framework is an Ofgem authorisation or registration process for TPIs carrying out regulated energy procurement activity. The precise detailed requirements have not yet been finalised.
When will Ofgem regulation of energy brokers start?
There is no confirmed start date. Ofgem aims to complete its market review in 2026 and set out starting ideas for the regulatory framework in 2027. Primary legislation is required before Ofgem can formally take on the new role.
Will broker commission be banned?
No universal ban has been announced. Ofgem's current good-practice focus is on clear disclosure, customer understanding and fair value while the future rules are developed.
Does my broker have to tell me its commission?
For non-domestic contracts signed from 1 October 2024, principal terms must clearly show third-party fees. Ofgem's 2026 good-practice guidance also says intermediaries should clearly explain commission or fee arrangements, including how much they receive and how the customer pays.
Can a broker say it compares the whole market?
Ofgem's current good practice says intermediaries should make clear whether they searched all energy suppliers or only certain suppliers. Businesses should ask which suppliers were actually included rather than relying on a broad marketing phrase.
Can I complain about an energy broker?
Qualifying Micro Business and Small Business customers have specific redress protections where the relevant supplier requirements apply. Ask the broker which complaint and redress route covers your contract before you agree.
Check what is actually being offered before you sign.
Send us your current broker quote and we will review the supplier, pricing, contract term and any commission shown, then compare it against the options available to us. If the quote is already competitive, we will tell you that too.
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