Citizens Advice Response to Ofgem’s Consultation on New Applications Regulations, Application Forms and Guidance Document
Citizens Advice welcomes Ofgem’s recently-published final proposals on new entry requirements. We were glad to see that many suggestions for protecting consumers have been taken on board, including:
proposed changes to ensure that applicants are appropriately resourced to enter the market,
that they understand their regulatory obligations and plan to meet them, and
that applicants are fit and proper to hold a license.
We look forward to the implementation of the new licensing process.
In our response [ 210 kb], we highlight the following key areas for improvement in the new application regulations, forms and guidance document:
Outline criteria for assessing applicants under Tier 2 rather than Tier 1, with a consideration for regularly applying the Tier 2 criteria when relevant; and
Require applicants to describe how they will manage unexpected customer types and how they plan to manage consumer debt.
In addition to the new licensing requirements, we think that Ofgem also needs to rapidly put forward a plan for monitoring and ongoing requirements. This should elaborate on how requirements like the fit and proper criteria will apply to already licensed suppliers. Ofgem should also urgently consider how it can more effectively manage supplier exit from the market, to reduce consumer detriment arising from these events and reduce the socialised costs.