The ultimate test for any new rule should be whether it makes the essential facts of a transaction easier to verify. Can the broker demonstrate the customer’s informed consent? Was the commission disclosed in a clear and timely manner? Can the entire "contract journey" be reconstructed for an audit? Was the customer presented with all relevant options before a decision was made? These are the outcomes that matter to consumers. The goal for Ofgem should be to ensure these outcomes are met without mandating a specific, high-cost method of achieving them.
The Path Toward Proportionate Regulation
The concept of "proportionate regulation" is central to this debate. Proportionality does not imply that customers of small brokers should receive less protection than those using large firms. Instead, it means that the same high standards and clear outcomes should be applied in a way that respects the different operating models across the industry.
When every transaction is burdened by a requirement for manual checks and duplicated documentation, the smaller operators are the first to feel the strain. The risk is that these brokers will simply walk away from smaller, "lower-usage" customers because the administrative overhead makes the account unprofitable. This would create a "service desert" for the very SMEs that Ofgem is most concerned with protecting. If these businesses lose their trusted local advisors, they may stop switching altogether, remaining on expensive default tariffs with their existing suppliers. This outcome would directly contradict the goal of a competitive and transparent energy market.
Digital Standards as a Regulatory Tool
One potential solution to the proportionality dilemma lies in the adoption of common digital standards. By shifting the focus from manual paperwork to standardized digital records, Ofgem could combine high levels of protection with low administrative friction.
A common digital standard for transaction records could cover the essentials: consent, commission disclosure, contract terms, and the timing of acknowledgments. If brokers are allowed to meet these standards through their own chosen technology, and if suppliers and regulators receive that information in a consistent format, the need for manual compliance processes is greatly reduced.
Technology providers are already demonstrating how this can work in practice. For example, Tickd’s energy broker software is designed to integrate compliance steps directly into the customer journey. Rather than being a separate, "after-the-fact" administrative task, compliance becomes part of the workflow. Prompts can ensure that necessary information is presented to the client at the right moment, digital signatures can capture consent, and a time-stamped audit trail can be generated automatically.
This type of automation allows a small broker to provide the same level of verifiable evidence as a large corporation, without needing a back-office team to manage it. Integrated platforms can connect data across the entire switching process, reducing repetitive tasks and ensuring that the record available to the broker, the supplier, and the customer is consistent and accurate. Technology, in this context, is not a replacement for professional judgment or accountability, but a tool to make high standards repeatable and affordable.
The Complexity of Commission Caps
Perhaps the most sensitive area of the current regulatory discussion involves commission. Ofgem is under pressure to act where charges are hidden or appear demonstrably excessive. However, the proposal of a "blunt" or universal commission cap is met with caution by many in the industry.
