You are here: Home - Household Bills -

Tough new rules for start-up energy suppliers come into force

Written by: Emma Lunn
Ofgem has made it much more difficult for new domestic energy suppliers to set up.

The energy regulator has implemented tighter rules for new energy suppliers entering the market, following the collapse of several small firms over the past few years.

Companies will now have to pass tougher tests to get a licence to supply energy in a bid to drive up standards for customers and reduce the risk of supplier failure.

Companies applying for a licence now need to demonstrate they can adequately fund their operations for their first year, outline how they expect to comply with regulatory obligations, and show their intentions to provide a proper level of customer service.

Suppliers will also have to prove that their directors, major shareholders and senior managers are all ‘fit and proper’ to hold a licence.

The past 18 months have seen several small energy suppliers including Brilliant Energy, Economy Energy, Spark Energy, Extra Energy, and Iresa Energy go out of business.

This led to Ofgem consulting on how to tighten checks on energy suppliers coming into the market. It announced new rules in April – and these come into effect today.

The regulator also plans to consult on new proposals with the aim of raising standards of existing suppliers.

Matthew Vickers, chief executive at the Energy Ombudsman, said: “It’s good that we have a vibrant and competitive energy market but, as we’ve seen with recent supplier failures and customer service problems involving small suppliers, there are some risks for consumers.

“We therefore think it’s right that Ofgem is putting stronger controls in place and taking action to raise the entry barrier for new market entrants.

“Ensuring that new suppliers know from the outset what they’ll need to do on the customer service front – and the consequences of failing to meet the expected standards – should help to avoid some of the problems we’ve seen in the sector recently and ensure that consumers get the protection they need.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • RT @YourMoneyUK: Government plans cut to minimum shared ownership stake
  • RT @WeareJust_PR: “Families tend not to talk about money and death. But if we don’t talk about these themes it becomes very hard to make pr…
  • RT @RoyalLondon: Voluntary NI contributions to state pensions have risen - @stevewebb1 hails this as “great news that the message is gettin…

Read previous post:
William Hill to close 700 betting shops

Bookmaker has entered into a consultation process over plans to close about 700 high street shops, putting 4,500 jobs at...