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Small firms need dedicated utilities watchdog

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Small businesses should have a watchdog dedicated to looking after their interests when it comes to handling problems with utilities suppliers, a business group has argued.

The Forum of Private Business (FPB) has said that small firms are missing out on the level of protection that is given to domestic consumers by Consumer Focus, the body set up in 2008 after Energywatch, the previous watchdog, was merged with other protection organisations.

According to an FPB survey of 1,700 small businesses, almost three-quarters of those who responded claimed to have experienced problems with their utilities suppliers.

These problems, the FPB reported, have worsened during the past six months for 59 per cent of the small businesses surveyed, while some 86 per cent of those firms expected them to deteriorate further.

Six out of ten firms said they wanted a dedicated watchdog to mediate between small businesses and utilities providers.

Consumer Direct, which is a new complaints handling system, has been introduced to deal with the UK’s smallest companies – those with 10 employees or fewer, with a turnover not exceeding £1.6 million and with an annual electricity consumption of not more than 55,000 KWh (or gas of not more than 200,000 KWh).

However, the FPB said it was concerned that many small firms fall outside of the criteria and will not be protected. Unlike Energywatch, Consumer Focus does not investigate complaints made by businesses unless their supply has been cut off and they are deemed to be ‘vulnerable’ customers.

As part of Ofgem’s new ‘complaints handling standards’, businesses are expected first to complain directly to their energy companies rather than Consumer Focus, the FPB said. Then, if the complaint is passed onto the energy ombudsman, the maximum compensation available is just £5,000.

Colin Beake, the FPB’s adviser on utilities, commented: “Consumer Direct, the energy ombudsman and Consumer Focus appear to be following guidelines that are not in the best interests of customers. It’s about time that the whole thing was overhauled to give small businesses better protection.”

Mr Beake added: “Businesses should be sure of their contractual agreements, be aware of when their contracts ends, and be sure to cancel their agreements in due time to allow them to locate the best prices when the contracts end.”