Energy suppliers to face tough new entry tests

Ofgem has today announced that new tests for energy suppliers entering the market will be rolled out from June this year. Companies applying for a licence to supply energy will have to demonstrate a number of things to changes which will help drive up standards for customers and reduce the risk of supplier failure.

Ofgem has today announced that new tests for energy suppliers entering the market will be rolled out from June this year.

Companies applying for a licence to supply energy will have to demonstrate sufficient funding, provide a customer service plan and pass a ‘fit and proper’ test.

The energy regulator says the changes will help drive up standards for customers and reduce the risk of supplier failure.

Matthew Vickers, chief executive at the Energy Ombudsman, welcomed Ofgem’s announcement. He said:

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“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.

In addition to the changes announced today, we look forward to Ofgem’s proposals for greater scrutiny and oversight of existing suppliers.

As the ombudsman we are keen to work with suppliers of all shapes and sizes to help them improve their complaint handling and customer service more generally.”

Matthew Vickers, chief executive at the Energy Ombudsman