Ofgem has issued proposals to check existing suppliers have adeqaute resources, checks and balances in place – and can exit the market with less disruption if they fail.
The regulator is concerned that while competition has been good for consumers, some suppliers do not have adequate risk management processes in place.
It plans to introduce rules so that it can demand audits of suppliers, an ongoing ‘fit and proper’ requirement, and new reporting requirements.
Ofgem also intends to introduce measures that hold auditors to the same standards as suppliers when companies fail – a move welcomed by Citizens Advice, which has long warned that consumers are being chased more aggressively for money by auditors that are not subject to the same controls.
The regulator reiterated that it is also working with government to change rules around the collection of levies, such as the RO fund, which has played a central role in the spate of failed suppliers over the last two years.
The levy is currently collected retrospectively, and suppliers have been spending the money to stay afloat, leaving other suppliers to pick up the tab when they go bust.
Ofgem is currently chasing suppliers including Robin Hood Energy for around £15m in outstanding RO payments. They have until the end of October to pay.
See the consultation here.