Source · Select Committees · Business and Trade Committee
Recommendation 3
3
Acknowledged
Paragraph: 36
Oxera’s review of Ofgem’s performance to regulate the retail market raised serious and fundamental questions...
Conclusion
Oxera’s review of Ofgem’s performance to regulate the retail market raised serious and fundamental questions about the regulator’s ability to carry out its primary duties. We agree with its findings that Ofgem has no proper frameworks for defining and measuring what consumer interests are or what effective competition means, and that Ofgem failed to understand the business models of the suppliers it is required to regulate and the incentives created by its own regulatory regime. We are surprised and concerned by the absence of robust quantitative impact analyses, which should have been essential in underpinning key decisions on regulating the retail market. That important decisions on tackling risky supplier behaviour were taken by operational teams rather than the Board, demonstrates a complete failure in corporate governance.
Government response summary AI-generated
Ofgem understands the Committee is eager to see the detail of its compliance and enforcement activity and actions and proposes to share this in due course, with a broader package of information requested in the Committee’s report, the annual report and Ofgem accounts in July following each financial year.
Summary of the government's response below — read the verbatim text to verify.
Paragraph Reference:
36
Government Response
Acknowledged
HM Government · verbatim extract
Acknowledged
Ofgem agrees with the Committee’s overall assessment of the weaknesses of the previous regulatory framework, and acknowledges that this did not adequately protect consumers from the consequences of the unprecedented increase in wholesale energy prices. It is clear that the regulatory framework was not sufficiently robust in areas such as financial resilience, governance and accountability, and that regulatory action should have been taken earlier to address emerging risks in the market. The lessons learned from this period have led to a major programme of regulatory reform which has already begun. Ofgem has significantly strengthened its regulatory oversight, including new and enhanced measures to protect consumers, as well as a more proactive and interventionist approach to monitoring and enforcement.
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