Outfox the Market fined £1.8m as Ofgem scrutinises suppliers’ finances
Outfox the Market has been forced to pay £1.8m to Ofgem for failing to provide essential financial data to the energy regulator, which has been ramping up its scrutiny of energy firms’ finances.
The challenger energy supplier – home to around 100,000 customers in the UK – repeatedly failed to provide “an appropriate level of detail” over its financial health, the regulator announced yesterday.
It has now agreed to pay into Ofgem’s voluntary redress fund, which supports customers in vulnerable situations.
Ofgem requested details concerning monetary income, outgoings, and capital reserves as part of its stress tests, but argued the supplier did not provide sufficient information within the required time frame.
Stress tests on suppliers are part of Ofgem’s pledged reforms, as the watchdog bids to shore up the finances within the market following the domestic energy crisis in 2021, which saw 30 energy firms collapse, including year-long nationalisation of Bulb Energy.
Under the tests, supplier must provide forecasts in three different price scenarios (when wholesale prices are lower, central or high), and is regarded by Ofgem as a key tool to assess the resilience of a supplier to absorb sudden changes in market conditions.
It wants energy firms to be sufficiently hedged, having bought energy in advance to match future customer demand, and financially resilient to ensure that companies are robust enough to absorb future price shocks in the market.
The company was also asked to provide information essential to Ofgem’s recent series of ‘deep dive’ market compliance reviews – with the industry currently awaiting results from its review on capital adequacy in the industry.
Cathryn Scott, director of enforcement and emerging issues for Ofgem, said: “Lessons from the past make it clear that the financial resilience of suppliers is key to a sustainable and competitive market for consumers.
“To ensure this, Ofgem regularly takes the pulse of every supplier’s financial health and it is vital that we are provided with accurate information on time. Outfox The Market repeatedly failed to do this and today we are making it clear to them and all suppliers that this vital process cannot be taken lightly.”
In July 2022, Outfox The Market was issued with the sanction because Ofgem was concerned the company was not responsibly managing costs and did not have adequate financial arrangements in place to cover potential shortfalls in the event of changing market conditions.
This has now been lifted as its financial position has improved significantly, the watchdog explained.
Outfox the Market has been approached for comment.