Outfox The Market pays £1.8 million for failing to report its financials
Press release
- Publication date
- Company
- Foxglove Energy Supply Limited
- Industry sector
- Supply and Retail Market
Domestic energy supplier Outfox The Market is to pay £1.8 million for failing to provide adequate financial data and other essential information to Ofgem.
The company has agreed to make the payment to Ofgem’s voluntary redress fund, which supports energy consumers in vulnerable situations, and other innovation and carbon emission-reducing investments.
As energy regulator, Ofgem requires detailed information of suppliers’ financial housekeeping to ensure that companies are robust enough to absorb future price shocks in the market, thus preventing a repeat of the energy crisis of 2021 when 30 suppliers went bust.
The importance of maintaining financial resilience was emphasised by Ofgem chief executive Jonathan Brearley in an open letter issued to all suppliers at the start of July this year.
The regulator requested details of financial income, outgoings and capital reserves as part of a ‘stress test’ process, where a supplier must provide forecasts in three different price scenarios (when wholesale prices are lower, central or high). This is a valuable tool to assess the resilience of a supplier to absorb sudden changes in market conditions.
The company was also asked to provide information essential to Ofgem’s recent series of ‘deep dive’ Market Compliance Reviews.
Outfox The Market – which supplies around 100,000 energy customers in the UK – repeatedly failed to report an appropriate level of detail within the timescale required.
·Cathryn Scott, Director of Enforcement and Emerging Issues for Ofgem, said:
“Lessons from the past make it clear that the financial resilience of suppliers is key to a sustainable and competitive market for consumers.
“To ensure this, Ofgem regularly takes the pulse of every supplier’s financial health and it is vital that we are provided with accurate information on time. Outfox The Market repeatedly failed to do this and today we are making it clear to them and all suppliers that this vital process cannot be taken lightly.”
In July, 2022, Outfox The Market was issued with a Provisional Order because Ofgem was concerned that the company was not responsibly managing costs and did not have adequate financial arrangements in place to cover potential shortfalls in the event of changing market conditions.
This Provisional Order, which prevented the supplier from taking on new customers, has today been revoked as its financial position has improved significantly.
Notes to editors
Updated policy documents for Provisional Order and Final Order decision.
Ofgem has already brought in tougher rules from companies’ finances to reduce their risk of failure, introducing regulations on how much they can rely on customers’ credit balances and Renewable Obligation contributions as working capital.
Enhanced ‘fit and proper’ tests for energy company directors have also been introduced.
The Energy Redress Fund is run on behalf of Ofgem by the Energy Saving Trust.