Recommendation 3

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.