Customers deserve strong, clear protection. They should understand who is advising them, how that intermediary is paid and what they are agreeing to. Consent should be demonstrable, commissions should be transparent and poor practice should have meaningful consequences.
But the way regulation is designed matters just as much as its intent. Requirements that depend on extensive manual reporting, costly systems or large compliance teams could make responsible small brokers unviable while leaving the largest operators best placed to absorb the cost.
With Ofgem facing a careful balancing act, how can they ensure regulations are encouraging industry standards to raise without pushing out smaller, independent brokers?
Why do independent brokers matter?
The business-energy broker market includes national operators, regional companies, family-run firms and sole traders. They do not begin with the same budgets, compliance teams or technology.
A requirement that is manageable for a large company can become a significant fixed cost for a one-person broker, particularly when it involves repeated manual checks, lengthy documentation, bespoke software or formal training programmes.
Smaller brokers are not simply miniature versions of large firms. Many compete through personal service, specialist sector knowledge and long-term customer relationships. A local broker may know each client’s sites, renewal cycle and operating priorities in detail. That can be especially valuable for small businesses that do not have their own energy-procurement function.
Other intermediary markets show how rising compliance costs can accelerate consolidation. Consolidation is not automatically harmful, but regulation should not accidentally determine the shape of the market by forcing reputable small firms to sell, close or stop serving lower-value customers.
Does supporting smaller brokers mean accepting weaker standards?
No. The energy-broker sector has faced legitimate criticism, particularly where customers have not understood commission arrangements or where charges appear excessive. Greater professionalism is necessary, and reputable brokers have an interest in rules that separate them from poor operators.
The media perception of energy brokers can be overwhelmingly negative, even though many brokers provide a responsible and valued service. Effective regulation should address the behaviour causing that mistrust while giving good firms a clear way to demonstrate how they work.
The test should be whether regulation makes the important facts easier to verify. Can the customer’s consent be demonstrated? Was commission disclosed clearly? Can the contract journey be reconstructed? Was the customer shown the relevant information before agreeing?
Those are questions provide real outcomes and evidence the capability and value of energy brokers. But, how does this work in practice?
Proportionate regulation must be the starting point
Proportionate regulation does not mean lighter protection for customers of smaller brokers. It means applying the same clear outcomes in a way that recognises the very different scale, resources and operating models found across the market.
The business-energy brokerage sector includes national operators, regional firms, family-run businesses and sole traders. A requirement that is straightforward for a large organisation with an in-house legal team can become a significant fixed cost for a one-person broker.
If every transaction requires repeated manual checks, duplicated documents and time-consuming reports, smaller businesses will feel that burden first. Some will stop serving lower-usage customers. Others may sell, close or decide that remaining in the market is no longer worth the risk.
That would not necessarily produce a better market. It could instead concentrate business among a smaller number of large operators and remove the personal, specialist support that many SMEs value.
Could common digital standards offer a better answer?
Common digital standards offer Ofgem a practical way to combine stronger protection with proportionality. A standard transaction record could cover consent, commission disclosure, contract information and the timing of key acknowledgements.
Brokers could meet the same core standard through their chosen technology, while suppliers and regulators would receive information in a consistent format. That would make records easier to check and reduce the need for every broker to create its own manual compliance process.
For a smaller firm, platforms such as Tickd’s energy broker software can build the required steps into the normal customer journey. Prompts can ensure that information is presented, acknowledgements can be captured at the correct stage and a time-stamped audit trail can be generated automatically.
Tickd’s integrated platform connects data and documents across the switching process. This type of automation can reduce repetitive administration while improving the quality and consistency of the record available to brokers, suppliers and customers.
Technology is not a substitute for accountability, training or professional judgement. It is a way to make compliance repeatable and verifiable without forcing every small brokerage to build a separate back-office function.
How can Ofgem cap commission proportionately?
Commission is one of the most sensitive areas for Ofgem to consider. Where charges are hidden or excessive, intervention is justified. However, a blunt cap could have unintended consequences if it ignores the work required to serve different customers or makes smaller accounts uneconomic.
Policymakers should first be precise about the harm they want to prevent. If the problem is secrecy, a common disclosure standard is the direct response. If the problem is demonstrably excessive charging, monitoring, thresholds and targeted enforcement may be more effective than setting one price for every kind of service.
Transparency can be delivered in practical ways. Tickd, for example, publishes how it makes money and sets out its commission rates by consumption band. A consistent market-wide format would make intermediary costs easier for businesses to understand and compare.
Ofgem must also consider the effect on switching. If regulation makes smaller customers uneconomic to serve or removes trusted local advisers, more businesses may remain with their existing supplier. That would work against the objective of a transparent and competitive market.
A simple proportionality test for every new rule
Every proposal should be tested against the circumstances of a responsible sole trader or small family-run brokerage.
Can that firm understand the rule, build it into its customer journey and produce reliable evidence of compliance without hiring a dedicated administrative team? If not, Ofgem should ask whether the requirement is genuinely necessary or whether the same protection can be delivered more efficiently through a common digital process.
Tickd work with small and large brokers and see first hand the value they offer
Tickd works with brokers of different sizes and sees the value that independent firms bring to the market. Smaller brokers should be expected to meet high standards, but they must also be given a realistic and affordable way to demonstrate that they have done so.
Customer protection and broker viability are not opposing goals. Reputable brokers benefit when confidence in the sector improves, and customers benefit when responsible firms can compete on service, expertise and trust.
That is the fine line Ofgem must tread. Regulation should be strong enough to remove poor practice, but proportionate enough to preserve good brokers and genuine competition.
Done well, reform can protect businesses, strengthen professionalism and give smaller brokers a sustainable place in the future energy market. Done badly, it risks concentrating the sector and depriving SMEs of the personal support they continue to value.
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