Small businesses at risk of being ‘cut off and ripped off’ in energy sector
More than a million small UK businesses are at a greater risk of having their energy supply disconnected than the average household, Citizens Advice has warned.
Around 1.5 million microbusinesses are also at greater risk of exploitation by unscrupulous energy brokers because of a lack of protections in the market, according to the charity’s report Closing the Protection Gap.
Microbusinesses, which make up 96% of all UK businesses and range from pubs and convenience stores to sole traders like photographers, are defined by the energy regulator as having less than 10 employees and only using a certain amount of energy.
The report details evidence of microbusinesses being needlessly disconnected, aggressively pursued for debts and mis-sold contracts by energy brokers, all of which could contribute to firms failing.
While suppliers to domestic customers must exhaust all other options before disconnecting them, they can be much quicker to cut off supply to microbusinesses, the charity found.
This could be particularly problematic for microbusinesses where a home is attached to a business and using the same energy supply, such as a flat above a shop.
Citizens Advice said it received 3,480 complaints from microbusinesses about debt-related issues between June 2018 and May 2019.
The commonly included complaints that they felt pressurised by energy brokers into agreeing contracts, were given limited transparency on broker fees and the number of suppliers spoken to.
Citizens Advice is calling on Ofgem, Government and industry to close the protection gap and address the “multiple problems” faced by microbusinesses in the energy sector.
It wants stricter regulation of energy brokers and other third party intermediaries, transparency around commission, market coverage and any other fees and improved debt and disconnection processes for microbusinesses.
Citizens Advice chief executive Gillian Guy said: “Microbusinesses should not face the prospect of being cut off or ripped off because of a lack of consumer protections.
“The regulator, industry and Government needs to do more to support the shopkeepers, sole traders and entrepreneurs who make up a large number of UK businesses and close this protection gap.”