Compliance and enforcement

In April 2022, Ofgem CEO Jonathan Brearley announced a series of Market Compliance Reviews to look at energy supplier performance.  

The aim of the reviews is to improve standards in areas such as customer service or support for vulnerable customers. 

For each review, suppliers had to submit: 

• performance data 

• internal documents 

• a self-assessment signed by their Board.  

Suppliers receive a separate rating for each Market Compliance Review.  A supplier may do well in one area but less well in another. 

Our current programme of Market Compliance Reviews covers the following supplier activities: 

1. Setting customer direct debits correctly. 

2. Supporting customers in payment difficulty or in debt. 

3. Identifying and supporting vulnerable customers.  

4. Providing good customer service. 

5. Ensuring senior staff at suppliers are fit and proper. 

6. Having adequate control of all the assets suppliers need to operate and deliver for consumers.

Once we have finished our review and rated the suppliers, we ask the suppliers with weaknesses to create an improvement plan. We check these plans and follow up on their implementation.

We may publish the results for each Market Compliance Review, including a supplier rating for reviews relating to consumer outcomes.

We use four ratings to categorise the suppliers: 

1. No Material Weaknesses: The supplier’s processes, governance and policies seem up to standard, and their data indicates they are generally achieving good consumer outcomes. 

2. Minor Weaknesses: Some of the supplier’s policies, processes or training could have been more comprehensive, but we did not find evidence of any significant concern. 

3. Moderate Weaknesses: The supplier did not have some of the policies or processes in place that we would expect, or the training and guidance available to their staff was not at the level we considered necessary. We may also have found some poor performance data. 

4. Severe Weaknesses: We either found that a significant proportion of the supplier’s processes and policies were missing or inadequate, or their data indicated that they are not achieving good consumer outcomes.  

Below we have set out the ratings for the suppliers included in the Market Compliance Reviews. 

Each table shows the rating for the supplier at the time we of review, and the current rating. The supplier may have taken action to improve performance. 

Our Market Compliance Reviews also contributed to four Provisional Orders we issued to suppliers with severe weaknesses. We do this when we think there is high risk of immediate poor consumer outcomes and we need a supplier to improve rapidly. We have set out the reasons for each Provisional Order below.

Direct Debits MCR

Tru Energy:  The evidence suggested that Tru Energy’s policies and processes were on the whole poor and inadequately documented. A PO was issued to Tru Energy on 28 July 2022 but was not confirmed and hence this lapsed on 28 October 2022.

Customers in Payment Difficulty MCR

Scottish Power: The evidence suggested that in spite of Scottish Power’s policies, customer service agents were not taking into account their customers’ ability to pay when setting debt repayment rates. A PO was issued to Scottish Power on 22 September 2022 and closed on 21 November 2022 after Scottish Power completed all actions required.

Utilita: The evidence suggested that Utilita did not always provide Additional Support Credit to customers where we would consider this to be the appropriate thing to do. A PO was issued to Utilita on 9 September 2022 but was not confirmed and hence this lapsed on 9 December 2022, which resulted in Alternative Action.

Customer service and complaint handling MCR

E.On: Our evidence indicated poor customer service performance for E.On. A PO was issued on 2 February 2023, requiring rapid improvement so customers can more easily contact the supplier. Based on the information provided by EON, the PO was not confirmed and ceased to have effect on 2 May 2023.

More information on the Provisional Orders is available in Publications below.

In April 2022 we announced market compliance reviews focusing on areas with an immediate impact on consumers (direct debits, customer service, support for vulnerable customers and support for customers with difficulty paying).

In May 2022 we expanded the review programme with more assessments that will focus on suppliers’ financial robustness and risk management.

Direct Debit Market Compliance Review

In January 2023, we shared an update of the progress of our market compliance review into direct debit payments. Through our review, we secured a number of improvements to the way that suppliers assess customer direct debits, and issue customer credit balance refunds. We did not find any evidence that energy suppliers were deliberately inflating customer direct debits. To date we have concluded compliance engagement with Bulb, E.ON, Ecotricity, Green Energy UK, Octopus, Outfox the Market, Shell, Tru Energy, Utilita and Utility Warehouse. We continue to engage with Good Energyand Ovo, to secure improvements or adequate reassurance of compliance. Further details of our progress can be found here. 

Customers in Payment Difficulty Market Compliance Review

In September 2022, we published the initial findings of our second Market Compliance Review on how suppliers support households who are having difficulty paying their energy bill. Through our subsequent engagement with suppliers so far, we have managed to secure various improvements including processes related to how suppliers identify and support customers in payment difficulty including those on prepayment that may have self-disconnected, policies and processes designed to ensure repayment rates are set based on ability to pay and improved signposting to third party support specialists. To date we have concluded engagement with EDF, Octopus, Bulb, SO Energy, Green Energy UK, Ecotricity, EON and Shell.  A more comprehensive update will follow as we finalise the remaining engagements.

Customers in a Vulnerable Situation Market Compliance Review (MCR)

In November 2022 we published our findings for the Customers in a Vulnerable Situation MCR. Following this we engaged with all suppliers on our concerns which included monitoring risks to vulnerable customers, strengthening governance around processes and controls, and improvements around their Priority Service Registers (PSR). We continue to engage them on their individual improvements where action is required. To date we have closed our compliance engagement with EDF , Ecotricity, Bulb, Shell, Green Energy, Tru Energy and Utilita.

Customer service and complaint handling Market Compliance Review (MCR)

In February 2023 we published our findings for the Customer service and Complaint handling MCR on how easily customers can contact their suppliers, and have issues put right. Following this, we engaged with all suppliers on our concerns and secured various improvements such as improved call waiting times , plans to tackle underperformance and improvement in key areas of the complaints process. We continue to engage with suppliers where action is required to ensure that customers can contact their supplier and resolve issues in an adequate and timely manner. A more comprehensive update will follow as we progress engagements.

Ofgem completes reviews into suppliers' procedures for assessing the fit and proper status of senior staff and their control of material and economic assets

Ofgem has undertaken two Market Compliance Reviews to assess domestic energy suppliers’ arrangements for ensuring that the senior staff running the business are fit and proper to do so and how suppliers maintain sufficient control over the material assets needed to run their supply business.

Our reviews identified key themes where we have sought improvements from some suppliers:

• Suppliers should consider the potential for harm to consumers and the operational/financial resilience of the business when identifying staff with significant managerial responsibility or influence (SMRI).
• When assessing fitness and propriety of senior staff, suppliers should not have an overreliance on self-reporting and should utilise all reasonably available information.
• Since April 2022 suppliers have been required to pre-notify Ofgem of proposed changes to senior staff. Suppliers are required to have robust arrangements to complete this.
• Suppliers must not rely upon hedging contracts without a legal right to ownership or control over the contracts.
• Suppliers must not rely upon material assets owned by a related company without an agreement in place to provide the supplier with legal rights over the asset.
• Where an intercompany agreement (or similar) exists to provide the supplier with access to an asset, suppliers must ensure that asset can continue to be relied upon in the event of an administrator being appointed.

Most suppliers have responded positively to our engagement and are taking steps to implement appropriate improvements. We will continue to work with suppliers to ensure they have in place robust arrangements for risk management and governance.

Market Compliance Assessments - Update on next steps and further annual assessments in 2022