TPI Code of Practice November 2018 Consultation Summary
Since ElectraLink’s initial declaration to develop an independent industry Third Party Intermediary Code of Practice (TPICoP) in July 2018, a key principle has been the engagement of TPIs, suppliers and interested third parties to ensure that a framework is delivered which achieves benefits for industry but ultimately for the consumer operating within the non-domestic market.
In a continuation of our open and transparent approach to developing the code, we conducted a consolation during November 2018 to open ourselves up to any additional viewpoints from industry; validate the draft code that has been developed to date and explore the outputs that have come out of recent working groups and bilateral meetings.
The consultation resulted in a good level of response from a wide cross-section of TPIs, suppliers and interested third parties. To remain consistent with the Chatham House Rules that were set out with industry prior to holding the TPICoP working groups during September and October 2018, ElectraLink is intentionally not publishing responses received from individual organisations. However, proposed drafting updates to the code and responses to the individual consultation questions, in addition to wider observations, have been subject to detailed review.
There was wide support for the development of the code and the principles upon which it has been developed.
Code Funding / Membership:
- Some questioned this contribution but during bilateral meetings it was generally accepted that supplier input is required.
- It should also be noted that the statement of supplier costs is indicative and forecast to decrease over time, with additional memberships.
- Payments and membership will also be subject to an annual review and reimbursements where applicable under the TPICoP Co Ltd model.
- the code demonstrates significantly lower overheads than other recognised industry Codes.
Some expressed a desire for a more flexible model for supplier membership
- We have taken on board these comments but feel that it is important that the code does not appear biased in any way. We perceive limiting the code and its future development to TPIs as a significant weakness, particularly in terms of customer recognition and benefit.
- We feel this position is further validated by the support we have received from a number of independent third parties, particularly in terms of the approach to the code and associated principles.
For additional clarity, it is the requirement that all TPIs wishing to be a ‘Founder Member’ must successfully comply with the Code prior to taking a position on the TPICoP Governance Panel, however it is suggested that their intent can be formerly recognised as they process through the assessment phase.
We will continue to review the membership model and welcome the opportunity to explore the way in which suppliers and independent third parties can engage and support the on-going evolution of the code.
Voluntary vs. Mandated Code implementation:
- To date there have been a number of viewpoints received in terms of Ofgem’s involvement in the code.
- The principles upon which the code has been based look to develop the measures that Ofgem previously set out in 2015.
- While we recognise that the mandating of the code by Ofgem would establish a baseline across the industry, we believe that given the independent approach to the code’s development, we would like to maintain that degree of independence going forward.
- Should Ofgem choose to extend supplier licence conditions in the near-future, then we believe this code would serve to provide an independent framework accessible to TPIs, suppliers and end-customers with an appropriate level of ongoing rigour delivered through the annual TPI re-assurance model.
- ElectraLink will maintain regular engagement with Ofgem as the Code continues to be developed.
- The requirement for TPIs to fully-disclose their commissions was widely accepted by respondents.
- For clarification, the disclosure measures included in the code apply to the individual TPIs. At this time, they do not include an additional disclosure by suppliers.
- However, to ensure full transparency for the end customer, this may be an issue that requires additional consideration as the code evolves or as and when Ofgem considers additional supplier measures in this part of the market.
- Respondents supported the proactive assurance model and the way in which it will help establish the code, its principles, and ensure that individual TPI organisations are regularly being held to account.
- There were differing views expressed regarding the measures that would be taken when TPIs were found to be non-compliant.
- The code sets out a regime whereby, in agreement with the TPICoP Governance Panel, appropriate action plans would be put in place to make individual organisations accountable for their non-compliance. These would be assessed by the Code Manager; with expulsion being the final potential outcome.
- We will also consider how observed non-compliance can be raised with the Code Manager and managed through the assurance framework in an appropriate and timely manner.
- A proposal was also received that a ‘Gold, Silver, Bronze’ accreditation scheme be developed.
- The levels of compliance are a key measure but this would result in additional complexity which could be misleading and difficult to administer over time.
- However, this suggestion has not been discounted. While we can see the merits of such an approach and agree that it could be supported by the assurance framework developed, we would suggest that this would be better developed in conjunction with the TPICoP Governance Panel over time.
Letter of Authority (LoA):
- The establishment of an industry standard LoA was widely supported, however some differing views were received on the content and layout of the form.
- There was also support for LoA principles to be set out in the Code itself, which could be part of the assurance measures.
- Taking onboard these comments, we believe it to be most appropriate to develop the LoA and principles further once the TPICoP Governance Panel has been established.
- Any additional measures within the Code would be subject to the change control process that has been set out.
Drafting updates to the code have already been made, where applicable, based on the feedback received from bilaterals and consultation responses.
We are looking to engage with interested parties further over the coming weeks and to launch the Code early in the New Year.
An updated initial baseline version of the TPI Code of Practice is now available and can be requested via [email protected]
The next round of engagements will be to formalise individual organisations support of the code and intent to become a Founder Member. TPIs, suppliers and interested third parties have already expressed their intent to support the development of the code further.
Whilst we have always acknowledged that the proposed timescales for launch are challenging, based on ElectraLink’s experience, we believe that launching the code early in the New Year is still achievable.