Small firms will lose a valuable advisory source when a major energy regulator disbands later this year, a leading business group has claimed.

Energywatch, the gas and electricity watchdog, is to be dispersed from 1 October and merged with Postwatch and the National Consumer Council.

However, the Federation of Small Businesses (FSB) is warning that its demise will leave firms with ‘nowhere to turn’ for help with energy contracts.   

Energywatch provides free and impartial advice and information to energy consumers and receives over 30,000 calls every year from small businesses alone.

The warning comes as an FSB survey of more than 1,000 business owners reveals that 57% have lodged a complaint with their energy supplier, with just 51% of grievances handled satisfactorily.

John Holbrow, FSB environment and energy chairman, said: ‘This survey provides damning evidence that some energy companies are still not treating small businesses properly.

‘It is sad to see that the Government is disbanding energywatch at the very time when its work on behalf of small business consumers is most needed.’

He added: ‘The Government has so far failed to ensure that there is an effective alternative in place. With Consumer Direct seemingly uninterested, come October there will be thousands of small business owners with nowhere to turn for help when their energy companies take them for a ride.’