It means that licensees will no longer be sold products that automatically commit them to further fixed-term contracts.
British Gas is the first energy supplier to make the move and is calling on other suppliers to follow suit.
From June 2014, existing British Gas customers will be able to choose which tariff they would like to sign up to. This will be from a range of fixed-term or variable options.
Those who reach the end of their contracts before June 2014 will need to contact British Gas to discuss their renewal, and will then be able to move to a non-rollover contract.
From 1 September, new customers will be offered fixed-term products without automatic renewal at the end of the term. Once these fixed products come to an end, British Gas Business said it will write to customers to offer further fixed-term options. If customers do not choose a fixed-term option, they will be moved onto a variable tariff, which they are free to leave at short notice.
Stephen Beynon, managing director of British Gas Business, said: “At British Gas, we are committed to leading the way in making the sale of energy simple and transparent for all our customers. Increasing numbers of our small business customers have told us they don’t like the way the energy industry automatically moves them onto new contracts, so we’ve decided we will lead the way and put an end to this practice for our customers.”
Prime Minister David Cameron added: “Small businesses are the engine of our economy and I am committed to ensuring that we do everything we can to help them succeed. Whether that is support to grow, cutting red tape or the lowest energy bills, we have to do everything possible to provide the environment in which they can flourish.
“Last year I committed to ensuring that consumers get the best possible tariff from their supplier. I know that auto-rollovers have similarly been a big issue facing small business so two months ago, I set up a cross-industry group on this issue. I am therefore delighted to welcome British Gas’s leadership and I hope that other suppliers will rapidly follow suit.”