Third-party intermediaries (TPIs) market review

What this is about

Ofgem has opened a call for input on Third-Party Intermediaries, the brokers, price comparison websites, auto-switchers and bill splitters that sit between customers and energy suppliers, ahead of taking on statutory authorisation powers that government has confirmed will be conferred on it. This is the evidence-gathering stage. No rules are being proposed yet. The exercise is designed to map the sector before the rulebook is written, with responses due by 16 July 2026.

The reason it is happening now is that the unregulated layer between non-domestic customers and suppliers has produced sustained, documented harm, particularly to micro-businesses. Brokers are typically remunerated by a commission paid by the supplier and loaded onto the customer's unit rate, often without itemised disclosure. A small business signing a three-year fixed contract may be paying 1-2p/kWh of uplift it never sees on the invoice. Government has decided this is no longer tolerable and that Ofgem will become the statutory authoriser. Before drawing the perimeter, Ofgem wants to understand sector structure, how competition actually works in each segment, where commission and contract incentives bend behaviour away from customer interest, and how outcomes vary between domestic users (who mostly interact with TPIs via price comparison sites), micro-businesses (the most exposed), SMEs and larger non-domestic customers (who tend to use brokers as procurement advisors).

Options on the table

Evidence-gathering call for input

This is not a rule consultation. Ofgem is explicitly seeking evidence on four things: how the TPI sector is structured across domestic and non-domestic segments; where competition between TPIs works and where it fails; what distortions arise from commission-based remuneration arrangements between TPIs and suppliers; and how consumer outcomes vary across customer types. The output is a sector picture that will shape the subsequent rulebook once statutory powers are conferred.

The winners and losers from the eventual rulebook are already visible in the structure of the call. Authorisation regimes are a fixed compliance cost: a TPI either meets the standard or cannot operate. The firms that can absorb a regulatory function, legal, compliance, audit, capital adequacy if required, win, because the long tail of small brokers either consolidates or exits. This is the standard Stigler outcome of an authorisation regime: incumbents benefit from a barrier to entry they did not have to build themselves. Micro-business customers benefit if disclosure rules force commissions onto the invoice as an itemised line, because the current arrangement loads broker pay onto the unit rate in a way that survives competitive comparison (every quote contains the same hidden uplift, so the customer has nothing to compare against). Domestic customers using PCWs are less affected because PCW economics are already broadly transparent, the comparison fee is paid by the supplier on conversion, the customer sees a rank-ordered list, and switching is essentially costless. The non-domestic broker market is where the real change lands.

Questions being asked

These are the four areas Ofgem wants evidence on. The phrasing below reflects the call for input; bracketed notes explain what is really being asked.

Sector structure and competition

- How is the TPI sector structured across domestic and non-domestic segments? [Ofgem wants a market map: how many TPIs operate in each segment, what share of customer acquisition runs through them, how concentrated each segment is, and what business models coexist, pure brokerage, PCW, auto-switching, bill-splitting, managed procurement.] - Where does competition between TPIs work effectively and where does it fail? [The implicit question is whether the non-domestic broker market is genuinely contestable. If every broker is paid by commission loaded onto the unit rate, customers cannot compare net-of-broker prices, and "competition between brokers" reduces to competition on sales effort rather than on customer outcomes.]

Behaviour and incentives

- What distortions arise from commission-based remuneration arrangements between TPIs and suppliers? [This is the central economic question. When the broker is paid by the supplier as a function of contract value, the broker's interest aligns with higher unit rates and longer contract terms, not with the customer. Ofgem is asking respondents to evidence the size and shape of this distortion.] - How transparent are TPI charges to end customers? [In practice: do customers know what they are paying their broker, and where on the invoice that payment sits. The honest answer from the non-domestic market is mostly no.]

Consumer outcomes

- How do outcomes vary across different types of consumers, particularly micro-businesses and vulnerable customers? [Micro-businesses are the high-detriment segment because they have neither the procurement sophistication of large non-domestic customers nor the regulatory protection of domestic ones. They sign multi-year fixed contracts on the broker's recommendation, with no equivalent of the domestic price cap and limited recourse if the deal turns out to be poor.] - What evidence is there of detriment in current TPI practices? [Ofgem is inviting respondents to put numbers on harm: mis-selling complaints, contract terms that block exit, hidden uplifts as p/kWh or as a share of bill, dispute resolution outcomes. Trade bodies will push back on the size of the problem; consumer groups and the ombudsman will provide the case evidence.]

How to respond

Submit responses by 16 July 2026 by email to tpi@ofgem.gov.uk. The supporting document is the 242KB PDF "Third-Party Intermediaries market review" linked from the consultation page. Ofgem has identified the target respondents as TPIs themselves (brokers, PCWs, bill splitters, auto-switching sites), energy suppliers, consumer groups and charities, trade bodies, and consumers. The call is open to anyone with relevant evidence; non-domestic customers with direct experience of broker-arranged contracts are the highest-value respondents because they hold the evidence Ofgem most lacks, the actual unit-rate uplifts and contract terms behind individual deals.