The third phase of the supplier licensing review is in flight with a Statutory Consultation currently open which closes on the 20th August 2020.
These proposals require stronger financial and risk management from suppliers to reduce the impact of supplier failure. Progress will be made on these proposals in the Autumn with new rules coming into force this Winter. Read Ofgem's consultation summary here.
A requirement for suppliers to take action in order to reduce costs which could be mutualised in the future. This will ensure suppliers are managing their finances effectively and are proactively managing the risk of leaving costs to be mutualised. This principle will allow Ofgem to take the necessary action and intervention where suppliers are unable to manage risks effectively.
Introduction of new supplier check points, based on customer numbers and financial compliance indicators, to allow Ofgem to question and evaluate suppliers’ ability to meet their regulatory obligations.
This is a principle-based requirement to make sure suppliers have adequate operational capability for better risk management.
Suppliers must ensure relevant individuals within their business who have significant influence are fit and proper for their role. The introduction of a new principle-based requirement for suppliers to be open and co-operative with the regulator.
Upon request from Ofgem, suppliers are to undertake an independent audit of their financial position and customer services systems and processes; ensure customers are protected and reduce wider market impacts in the event of market exit; and to report any control of business changes to Ofgem.
These proposals are aimed at reducing the impact when suppliers exit the market in an unruly manner.
The deadline for feedback or any responses on this consultation is set for the 20th August 2020 with a decision expected in autumn. The consultation document can be found here and if you should more information on this or any other Ofgem consultation with one of us please contact Jolyon Canlin or Sarah Smith who will both be happy to discuss in detail.