On 10 October 2017 the Office of Gas and Electricity Markets (Ofgem) published guidance relating to its revised Standards of Conduct, which form conditions of gas and electricity licences. Additionally, Ofgem published updated Enforcement Guidelines, which set out how Ofgem may use its enforcement powers where businesses breach their obligations, including the Standards of Conduct.
The Standards of Conduct are enforceable, overarching rules aimed at ensuring that licensees treat domestic and microbusiness customers fairly. In addition to the three existing broad principles that suppliers must follow (behaviour towards customers, providing customers with information and customer service processes), Ofgem has added a fourth broad principle that suppliers must consider vulnerable domestic customers. Ofgem will take into account four main components when applying the Standards of Conduct: (i) the customer objective of delivering fair outcomes for customers; (ii) compliance with the broad principles discussed above; (iii) adhering to the ‘fairness test’ and (iv) ensuring ongoing compliance. Ofgem has now amended the ‘fairness test’ so that it focusses on the outcome for consumers, rather than the impact on suppliers. In addition, instead of licensees being required to take “all reasonable steps” to achieve the Standards of Conduct, they now “must” achieve these, i.e. whether a customer has been treated fairly is now based on the consumer outcomes a supplier has delivered, rather than their attempts to secure compliance.
The Enforcement Guidelines set out Ofgem’s approach to using its enforcement powers under sectoral, consumer and competition legislation. The main changes made to the Guidelines include streamlining the criteria that Ofgem applies to decide when to open an investigation and use its enforcement powers and clarifying Ofgem’s expectations regarding companies self-reporting possible non-compliance with licences. In addition, there are general revisions to reflect the fact that enforcement of the Standards of Conduct is now well-established and to account for Ofgem’s updated practices in relation to competition law investigations