Energy regulator Ofgem has warned it will consider enforcement action against suppliers who fail to protect energy customers in trade sales.
Trade sales are defined as commercial transactions between energy suppliers that may impact customers, such as buying or selling a group of customer accounts. As a general rule, Ofgem says it prefers such sales over regulatory intervention such as the supplier of last resort (SoLR) process.
In an open letter to the industry published today (4 May) Tessa Hall, Ofgem’s head of retail compliance conduct and enforcement, outlined what the regulator expects of suppliers when conducting trade sales.
She added that in addition to the expectations set out in the letter, Ofgem was considering whether it should introduce specific requirements for suppliers in relation to trade sales, as part of its supplier licensing review, particularly if a trade sale was to subvert or distort the Supplier of Last Resort (SoLR) process.
Hall said suppliers are expected to conduct thorough risk management, such as ensuring vulnerable customers are identified, have plans in place to handle all customer data in line with the relevant data protection legislation and scheduling major system changes to avoid disruption.
Furthermore she outlined the need for suppliers to articulate their commitment to providing good customer service and communicate effectively to customers. Ofgem also expects both parties involved in a trade sale to communicate with third parties such as Citizens Advice and/or the Energy Ombudsman throughout the process.
Hall warned that if Ofgem becomes concerned that a supplier is not taking sufficient steps to prevent and address issues, has not undertaken sufficient planning or has not completed adequate due diligence, it may initiate compliance engagement.
In more serious cases, Ofgem says it may discuss issues at its Enforcement Oversight Board with a view to taking more formal action.
“We will, of course, take the specific circumstances into account, but our expectation is that suppliers involved in a trade sale will have planned diligently and that actions will have been taken to mitigate risks to customers,” Hall said.