What do the new Ofgem rules mean for your business?
Updated: Sep 21, 2020
Does switching energy suppliers make you nervous? Maybe you’ve seen news stories about some of the smaller, newer suppliers going bust?
There’s no doubt recent supplier closures have persuaded some customers to stay with their existing suppliers despite rising bills. But with new Ofgem regulations on the way, many domestic and business customers may now look to make a change.
The Context of the OFGEM update
Maybe you noticed the slew of energy business closures at the end of 2018 and start of 2019? Ofgem this month announced new measures designed to protect customers from supplier collapses.
From June onwards, those who wish to set up a new energy supply firm will be required to meet certain conditions. They will need to show themselves to be ‘fit’ for the job. It is hoped that this will help assure adequate customer service levels are met. The changes also aim to prevent customers from being left out of pocket by firms going bust.
As part of the update, those who apply for a licence from Ofgem includes a ‘financial health check’ to show they are able to fund the running of their company for at least one year. In addition, key individuals such as directors, senior management and major shareholders will need to pass a ‘fit and proper’ test to show they are up to holding a licence.
OFGEM aims to provide customer reassurance
So, what does this mean for your business? Right now, there are minimal checks required to set up as an energy supply company. This means that in the wake of the closure of firms such as Brilliant Energy, these procedures are a welcome way to reduce risk.
Like all legislation, they may put off some firms who would have otherwise entered the market place and potentially performed well. But right now – it’s important for the energy industry to provide customers with reassurance and extra safeguarding.
In recent years, a number of energy providers have entered the UK market. This has naturally been seen as a positive thing when it comes to competitive pricing. While these new measures won’t guarantee that new suppliers won’t fail, they will force them to be better prepared for success.
If you’ve been holding off making an energy switch due to uneasiness caused by recent stories of supplier closures, why not fix up a no-obligation chat with one of our energy consultants?