Tougher tests for new energy suppliers to be implemented to protect you the customer

by Ian Sinkamba Domestic Energy News

Tougher tests for new energy suppliers to be implemented to protect you the customer

Stricter rules will now mean that small energy suppliers will have to prove themselves before they can win your custom.

You may have noticed that there’s been a raft of new entrants to the energy market in recent years. If you’ve shopped around for the best deal, you’ll know that the conversation is no longer just about the “Big 6” suppliers. Instead there are many new and innovative companies looking to win your business – each with their own unique selling point and often a quirky style to boot.

Over the past six months you may also have heard talk of a few small suppliers closing, including Gen4U, Our Power and Brilliant Energy. So, to ensure that you the customer can be confident in your supplier when you next come to switch, regulators have responded by announcing a more rigorous system for operators in the marketplace, which is designed to provide peace of mind for households and businesses around the UK.

Regulator Ofgem has said that they are raising the bar of entry into the industry, in an effort to “minimise the impact” and chances of supplier failure for consumers.

Under these new tests, which are set to be introduced in June of this year, firms will be made to prove that they have sufficient funding and can provide a consistent, high standard of customer service.

Greater choice has been good overall

While there have been some high profile casualties in the energy sector recently, Ofgem has also highlighted that consumers have benefited from the increased competition created by new entrants to the market. Lower energy bills, improved customer service standards and increased are all notable changes to an industry that had long been dominated by a few large companies.

Ofgem’s new tests will ask those companies applying for an energy supply license to comply with several key conditions. These include:

  • Being able to demonstrate that they can adequately fund their operations for the first year
  • Being able to show their intentions when it comes to providing a high standard of customer service
  • Being able to show that senior team members such as directors, senior managers and shareholders are “fit and proper” to hold a licence

The regulator also announced that this summer it would begin consulting on proposals to raise the standards of existing energy suppliers, as well as reviewing the arrangements in place for when a supplier fails.

“Minimise the risk of supplier failure and help drive up standards”

According to Mary Starks, Ofgem’s executive director of consumers and markets, the aim of these new tests is to “protect consumers while also ensuring that they enjoy the benefits of increased competition and innovation that successful new firms entering the market bring.

“Applying new requirements on suppliers entering and operating in the market will aid us to weed out those that are underprepared, under-resourced and unfit. This will help minimise the risk of supplier failure and help drive up standards for consumers.” “We will adopt a proportionate, risk-based approach to licensing suppliers and will continue to encourage competition”. This, says Starks, will provide more “innovative business models which benefit consumers.”

Trade association Energy UK was also pleased with the new developments, with chief executive, Lawrence Slade, commenting: “We want to see a future retail market where competition thrives and customers benefit from increased choice and service.” With these new tests in place, consumers can enjoy a brighter future with greater peace of mind and protection.

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