Symbio Energy: Ofgem Final Order (cashflow information)

slimbuck

(Credit to @matelodave who already posted this in the Symbio feedback thread, but it is in danger of being lost there amongst the other posts there on Scottish Power, Octopus Energy, Zog, Pfp, etc.)

On 18 August 2021, the Authority published a Notice of proposal to make a final order (“FO”) in respect of Symbio Energy Limited (“Symbio”).

The particular behaviour of concern giving rise to the proposed FO is that Symbio has refused to provide financial information requested by Ofgem under Standard Licence Condition ("SLC") 5. SLC 5 gives the Authority the power to request information from licensees.

The information was originally requested by Ofgem on 28 May 2021.

In particular, Ofgem are seeking:
"The latest cashflow forecasts, with the applicable date, for the next 12 months, with the first six months shown daily, and monthly hereafter for the remainder of the 12 month period."

Symbio Energy has previously indicated to Ofgem it will not be supplying this information.

"Where a licensee fails to comply with the FO by providing the requested information the Authority may initiate the process of revocation of the licence or take other action to enforce compliance."

https://www.ofgem.gov.uk/publications/symbio-energy-final-order

[Deleted User]

If this is Ofgem’s response to the criticism that it has been receiving about the number of failed suppliers then I am not sure that demanding to see cashflow forecasts - in such a public way - will help a struggling supplier. Indeed, it could hasten a supplier’s demise as worried consumers decide to switch and ditch.

MWT

I'm not sure that the original demand was all that public, but the failure to respond seems reasonable to put in the public domain.

UnclaimedEnergy

Dolor said:

If this is Ofgem’s response to the criticism that it has been receiving about the number of failed suppliers then I am not sure that demanding to see cashflow forecasts - in such a public way - will help a struggling supplier. Indeed, it could hasten a supplier’s demise as worried consumers decide to switch and ditch.

I think that's kind of what they want... the sooner customers switch away from Symbio the lower any subsequent payments they need to make will be.

Ofgem's role as a regulator isn't to lend a hand to suppliers who don't pay their bills to make sure they can stay afloat etc. - the fact they've waited this long before doing a Final Order on it for me, is too slow.

The argument of "you shouldn't tell people we can't pay our bills and manage our cash-flow" is extremely weak when the companies main role is supplying a service that is so critical to peoples lives.

slimbuck

Dolor said:

If this is Ofgem’s response to the criticism that it has been receiving about the number of failed suppliers then I am not sure that demanding to see cashflow forecasts - in such a public way - will help a struggling supplier. Indeed, it could hasten a supplier’s demise as worried consumers decide to switch and ditch.

I don't think this action is in response to any criticism Ofgem may or may not have received. There is no indication in the article that is the basis.

The basis is said to be to be to verify the supplier can meets it's financial responsibilities as defined under SLC 4B. There have been a number of past occassions when Symbio failed to meet it's financial commitments when due, and Symbio were fined £100k by Ofgem earlier this year for their repeated failings in that regard.
They were initially offered a 15% reduction in the fine, but Symbio failed to accept it.

Ofgem have been trying to negotiate in private with Symbio for 3 months the information they have been seeking. Symbio have refused to supply it, despite it being a condition of their supply licence to provide it. They initially told Ofgem back in early June they were refusing to supply it, and Ofgem have not been able to pursuade Symbio to change that approach since.

So what action would you suggest Ofgem should have taken now to ensure compliance?

It is only with an Order that Ofgem can ultimately seek a court order forcing the supplier to provide the necessary evidence.
Orders are by necessity something that must be publicised, as would any resultant court action/order also be open to public scrutiny.

 

niktheguru

I wonder if ofgems email interactions with symbio are similar to those of the customers.....when ofgem call are they on hold for 15 minutes?

SPOWER

I cant see the need for multiple threads about this business.  MSE want to take a look.  They do this when it suits them.  My yawn yawn yawn post got taken down.  They better not go bankrupt till I get my £60.

[Deleted User]

slimbuck said:

Dolor said:

If this is Ofgem’s response to the criticism that it has been receiving about the number of failed suppliers then I am not sure that demanding to see cashflow forecasts - in such a public way - will help a struggling supplier. Indeed, it could hasten a supplier’s demise as worried consumers decide to switch and ditch.

I don't think this action is in response to any criticism Ofgem may or may not have received. There is no indication in the article that is the basis.

The basis is said to be to be to verify the supplier can meets it's financial responsibilities as defined under SLC 4B. There have been a number of past occassions when Symbio failed to meet it's financial commitments when due, and Symbio were fined £100k by Ofgem earlier this year for their repeated failings in that regard.
They were initially offered a 15% reduction in the fine, but Symbio failed to accept it.

Ofgem have been trying to negotiate in private with Symbio for 3 months the information they have been seeking. Symbio have refused to supply it, despite it being a condition of their supply licence to provide it. They initially told Ofgem back in early June they were refusing to supply it, and Ofgem have not been able to pursuade Symbio to change that approach since.

So what action would you suggest Ofgem should have taken now to ensure compliance?

It is only with an Order that Ofgem can ultimately seek a court order forcing the supplier to provide the necessary evidence.
Orders are by necessity something that must be publicised, as would any resultant court action/order also be open to public scrutiny.

 

Ofgem has been widely criticised in recent years (by Citizens Advice and many others) over its lack of any financial and business checks on new applicants for a Supply Licence. Ofgem brought in enhanced checks for new suppliers a while ago. Since then they have released this consultation:

Quote: Building on the new entry requirements for new suppliers that came into force in the summer, the new rules for existing suppliers would let Ofgem request independent audits of suppliers’ customer service operations and financial status.

As part of this, new checks would be introduced for growing suppliers before they hit certain thresholds of customer numbers requiring them to ensure they have the operational capability to effectively serve their customers. If they fail the checks, they would be stopped from taking further customers on.

Ofgem proposes introducing further ongoing ‘fit and proper’ requirements for suppliers, to ensure those in senior management positions are fit to carry out their duties, and a new principle for suppliers to be open and cooperative with the regulator.

All suppliers would have to assess their readiness for orderly failure by maintaining ‘Living Wills’ that would be scrutinised by Ofgem. Suppliers would have to set out what would happen in the event of their failure, including any barriers to an ‘orderly exit’. This could include the likely costs faced by other consumers, disruption to services for their customers and how they would ensure compliance with any relevant licence conditions.

New rules would also be introduced to avoid disruption associated with supplier exit. These would ensure that, when a supplier fails, certain consumer protections around debt collection practices remain in place.  Unquote

By making it public that Ofgem is concerned about a supplier’s financial cashflow, it is arguably doing the supplier significant reputational damage.  Not least, because it has been posted and is being discussed in forums such as MSE.

As we all end up paying for supplier failures, I am not sure that this is the approach that I would take if I was concerned about a supplier’s financial viability. It could all be done very quietly and without fanfare. That said, I have to admit that I have no idea how many discussions have taken place in private, and I accept that the possible revocation of a Supply Licence has to follow a laid down process.

Knowing what I know now would I consider Symbio as my next supplier, I think that you know my answer.

MWT

I still don't see Ofcom as 'being concerned' about their cash flow, beyond exercising their right to make sure they are well placed to handle the volume of customers.

The concern is generated only by Symbio refusing to give them the information...

matelodave

Symbio do seem to have a bit of a problem and need a motivational squb up them every now and again to keep them in line - https://www.ofgem.gov.uk/search?keyword=symbio&sort=publication_date

Jeremy_Klein

There are some aspects of Symbio's business model which make external financial oversight rather important at this point.

Symbio has been attempting to switch consumers to a contract which requires them to provide working capital to Symbio up to 15% of their estimated consumption.  (i.e. bills are inflated to be permanently 15% ahead of their best estimates of consumption.)  But the company’s estimation model routinely overestimates consumption by over 100% in some cases.  The review website Trustpilot is replete with consumers who experience of forward consumption being vastly overestimated.  The combined effect of the new contract and the inaccurate estimation model is that Symbio may now be borrowing considerable sums from its customers.  This clearly represents a financial risk to the industry if Symbio is forced to cease trading.  Customers’ credit balances may well not be recoverable and it is unlikely that the industry would easily cope with Symbio’s collapse as other companies would in effect need to subsidise considerable irrecoverable customer credits. 

Accordingly, I consider that it is imperative that this company is subject to appropriate external oversight as soon as possible.  I would expect that full access to up-to-date management accounts as Ofgem has mandated would be essential to establishing the company’s financial position, particularly in order to establish the extent to which consumers’ credit balances are protected and recoverable in the event of Symbio being forced into liquidation.

Of course, Ofgem may be more exercised by Symbio's failure to make previous deadlines for payment into Government renewable schemes.