MSE News: Ofgem poised to tighten up on smaller energy companies

in Energy
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MSE_Stephen_BMSE_Stephen_B MSE Staff
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MSE Staff
Ofgem is looking at making it tougher for smaller energy suppliers to enter the market citing concerns about poor customer service and financial instability...
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'Ofgem poised to tighten up on smaller energy companies'
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  • Wow, OFGEM thinking about acting on the issue of supply licenses.
    Note that the article makes no mention of the idea to have an insurance bond that all providers should be forced to take out so that the consumers do not have to fund the bankrupt companies.
    That would be too much to ask for wouldn't it?
  • SystemSystem Forumite, Community Admin
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    Ofgem has been dragging its heels on this for years. It has never seen business due diligence as playing any part in the Supply Licence approvals process. Citizens Advice has been pushing for change for over a year. This is their response to the Ofgem announcement:

    Citizens Advice has responded to Ofgem!!!8217;s announcement of the scope of its review into licensing of energy suppliers.

    Victoria MacGregor, Director of Energy at Citizens Advice, said:

    !!!8220;This announcement from Ofgem is a step in the right direction. Consumers deserve much more protection from poorly performing energy suppliers.

    !!!8220;Ofgem needs to take back control of its licensing processes. It is too easy for energy firms to enter the market and the process for removing failing companies is too slow.

    !!!8220;We!!!8217;ve seen some suppliers granted licences when they simply aren!!!8217;t ready to provide good quality customer service. Others don!!!8217;t have robust enough business plans in place to deliver on the low prices they promise consumers, or even survive in the current market.

    !!!8220;We will continue to work closely with Ofgem as this review is conducted to ensure that the new licensing regime better protects consumers.!!!8221;

    The words in Bold are the key ones for me.
  • I really hope they do something about this. Of the smaller/newer suppliers, I've recently been with Green Network Energy and Solarplicity.

    Solarplicity is by far the worst I've ever seen in customer service - just check out the reviews on TrustPilot. They don't answer the phones, nor respond to email. Not even the Head of Customer Service, Mia Patience, nor Jack Scorgie the Social Media manager. It's beyond a disgrace. Word of advice to stay well clear!

    GNE is ok once you speak to Gloria the complaints manager. The others in customer service are largely mediocre/poor at customer service.
  • SystemSystem Forumite, Community Admin
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    In my view, it just needs Ofgem to step up to the plate and rescind just one supplier's licence. The others would then take note. Taking years to investigate SLC breaches just makes them look inept: more so, when the only sanction is a voluntary payment in lieu of a fine. I suspect that Ofgem has a problem with this approach as it will hasten the calls for much-needed change within the Ofgem organisation which, in my opinion, has served consumers badly for years. I also agree with @gsmlnx, the Consumer Levy needs urgent review. Why should a Granny in Yorkshire, who has been on BG's standard tariff for years, have to cough up for the failure of a supplier? Suppliers should be required to take out an insurance bond. Can I see it happening: no - Ofgem will see it as stifling competition.
  • brewerdavebrewerdave Forumite
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    Hengus wrote: »
    I also agree with @gsmlnx, the Consumer Levy needs urgent review. Why should a Granny in Yorkshire, who has been on BG's standard tariff for years, have to cough up for the failure of a supplier? Suppliers should be required to take out an insurance bond. Can I see it happening: no - Ofgem will see it as stifling competition.


    ...unfortunately it would stop any new entrants dead - remember you would be asking a fledgling company to pay out a very large sum for a bond when they have zero customers!
    OFGEM should be forced to carry out financial due diligence on any proposed new entrant before licensing them.
  • SystemSystem Forumite, Community Admin
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    brewerdave wrote: »
    ...unfortunately it would stop any new entrants dead - remember you would be asking a fledgling company to pay out a very large sum for a bond when they have zero customers!
    OFGEM should be forced to carry out financial due diligence on any proposed new entrant before licensing them.

    Proper business due diligence for a start up can take anything from 4 weeks to 4 months. Who pays? A £400 Supply Licence fee isn't going to cover it. As far as competition is concerned, do we really need 69 domestic energy suppliers (Ofgem as at 31 Dec 17) when Ofgem has shown that it is incapable of policing the activities of even the Big 6.

    Bonds are, in my opinion, a well tested method of assurance.. There are many organisations that are forced to take out a Bond prior to securing any form of income; eg, start up airlines. The alternative is to go back to the old system where consumer credit balances were not protected as is the case with mobile phone; broadband and most other contracts. At the moment, consumers are paying for Ofgem's poor licensing decisions and its lack of regulatory compliance scrutiny. The latter seems to rely on consumers, and organisations such as Citizens Advice and MSE, bringing alleged breaches/issues to Ofgem's attention.
  • FarwayFarway Forumite
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    Remember that OFGEM was set up as a sop to placate those opposed to privatization of the energy companies

    It was deliberately made toothless & useless to prevent scaring off private investors
  • XenonXenon Forumite
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    OFGEM are not fit for purpose - never mind energy suppliers !
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