Source · Select Committees · Business and Trade Committee
Recommendation 6
6
Acknowledged
Paragraph: 45
We call on Ofgem to make full and proper use of its enforcement and compliance...
Recommendation
We call on Ofgem to make full and proper use of its enforcement and compliance powers to clamp down on rule breaking by suppliers, particularly relating to customer service standards. Ofgem should work with the Government to ensure it has the necessary complement of qualified staff working on its enforcement and compliance teams. We ask Ofgem to provide us with a detailed strategy on how it will improve its enforcement and compliance activity to effectively protect customers, and the timelines within which this will be achieved. We expect that from this financial year onwards, and on an annual basis, Ofgem provides a memorandum to this Committee, which includes a breakdown of the allocation of its resources and a summary of the enforcement and compliance action it has taken in response to rule breaking by energy suppliers.
Government response summary AI-generated
Ofgem has begun to consider the new powers that would be of benefit to consumers, including enforcement for unfit directors, the ability to appoint a third party to operate an energy supplier, the power to act against the parent company of a licensee, and making it quicker and easier to revoke a licence.
Summary of the government's response below — read the verbatim text to verify.
Paragraph Reference:
45
Government Response
Acknowledged
HM Government · verbatim extract
Acknowledged
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. of the compliance and enforcement action Ofgem has taken against licensed energy suppliers and a breakdown of the allocation of resources to this work. Ofgem expects to provide this as part of a broader package of information requested in the Committee’s report, the annual report and Ofgem accounts in July following each financial year. 20 Responses to the Committee’s Third Report of Session 2022–23 potential customers service compliance issues at an early stage, for example in response to reports that suppliers were refusing to offer customers their standard variable tariffs. unprecedented and unexpected rise in gas and electricity prices. Ofgem has reiterated its expectations of suppliers, particularly in relation to customer service and their treatment of the most vulnerable consumers. Ofgem has also made it clear that it intends to “raise the bar” on what is expected on financial and risk management. During 2022 Ofgem has engaged suppliers in areas including financial resilience, stress testing, asset control and launched a series of market compliance reviews. These activities and associated compliance engagement are ongoing but have already initiated enforcement action against TruEnergy, Foxglove, UK Energy Incubator Hub, Utilita and Scottish Power. Ofgem has also consulted on and implemented a number of changes to further protect consumers including modifications to licence conditions for new entrants and where suppliers reach certain milestones, updates to the financial responsibility and operational capacity principles and additional measures for reducing potential supplier failure and better protecting consumers money. Over the last three years, Ofgem’s compliance and enforcement teams have broadened their approach to tackle emerging issues as quickly as possible and better manage licensee behaviour, including through a greater use of alternative action and Orders. In this time Ofgem has issued over 60 Orders to suppliers as part of successful action on over 80 supplier cases with penalty/redress payments of over £37.5m, out of a broader figure of over £300m across all regulated parties. Ofgem has continued to strengthen its compliance and enforcement capacity with 60 Full Time Equivalent staff in position as of 30 September 2022.
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