Ofgem is seeking to protect small businesses from misselling by energy brokers with the creation of a new code of practice (COP).

The code will require energy brokers and other third party intermediaries (TPIs) to be much clearer about their fees, contracts and which suppliers they represent when dealing with retailers.

The proposals will also require suppliers to only work with brokers that have signed up to the COP.

The COP would be governed by an independent board comprising suppliers, TPIs and consumer groups with oversight from Ofgem. This independent industry body would have powers to expel a TPI for non-compliance.

Ofgem has also opened a consultation into suppliers’ use of automatic rollovers of fixed term contracts for businesses.

While stopping short of banning rollover contracts altogether, Ofgem is proposing that small businesses would need to give a maximum of 30 days’ notice of their intention to switch suppliers at the end of their contract.

Currently notice periods range from 30-90 days.

Streamlining this across suppliers would end confusion about when businesses needed to inform suppliers of their intention to switch at the end of the contract, Ofgem said.

The Association of Convenience Stores (ACS) welcomed the consultations.

Chief executive James Lowman said: “Many retailers use third party intermediaries and brokers as part of their business to take away the time-consuming aspect of managing energy in-store. However, there are a number of TPIs who mis-sell to business customers and this must be stopped,”

However, he also urged Ofgem to consider an “outright ban” on rollover contracts in addition to the other proposed measures.

The TPI consultation closes on 9 May.  

The consultation on rollovers ends on 11 April.