Ofgem invokes ‘fit and proper’ rules to remove company director

Ofgem has revealed it is seeking to force an energy supplier to remove one of its senior directors in what would be the first use of its new ‘fit and proper’ requirements.

The regulator is proposing to issue a final order against UK Energy Incubator Hub to remove a senior individual from a position of “significant management responsibility or influence”.

The domestic energy supplier serves approximately 3,000 customers and operates under two brands, Northumbria Energy and Neo Energy.

It is the first time Ofgem has proposed to use its new rules that require energy bosses to be fit and proper for the job, which it introduced last year.

Ofgem would not name the individual it wants the supplier to remove when asked by Utility Week but pointed to the Companies House website which shows the only active director is an Alexander Kluender.

The regulator said its concerns centred around a number of “serious, persistent and recent compliance failings”, such as a failure to provide basic information about the company when asked by Ofgem and poor customer service.

These breaches have been the subject of three separate provisional orders so far this year.

There will now be a consultation period of 21 days, after which time the regulator’s Enforcement Decision Panel will decide whether to make the final order.

Ofgem further stressed that no findings about regulatory contraventions by the company relating to the new rules have been made at this stage.

Cathryn Scott, Ofgem’s director of enforcement and emerging issues, said: “Ofgem’s role is to protect consumers and we are raising the bar and taking firm action against suppliers to ensure they are fit and proper and have robust and sound financials.

“This is our role as a robust regulator and is what customers expect and deserve. Our tightened-up rules will help protect bill-payers during these very difficult times.”

Foxglove Energy Supply

Elsewhere, Ofgem has been accused of being heavy handed in its approach to financial regulation by a supplier which has been banned from taking on new customers.

The energy regulator has concerns that Foxglove Energy Supply, which trades as Outfox the Market, is not responsibly managing costs that could be mutualised and that it does not have adequate financial arrangements in place to meet its costs that are at risk.

It is also concerned that Foxglove is not taking appropriate action to minimise such costs.

Ofgem said that based on engagement with the retailer since February this year, it appears Foxglove is contravening or is likely to contravene its licence condition to responsibly manage funds that could be mutualised.

Under the provisional order, Foxglove has until 2 August to improve its financial position so that it can demonstrate it can operate effectively under all financial stress test scenarios provided by Ofgem and in doing so ensure that it will be able to meet its Renewables Obligation liability.

Until it provides the regulator with a report confirming it has complied, Foxglove is banned from taking on new customers or upgrading any of its existing domestic customers to dual fuel. It further must not make any payment, loan or transfer any asset, to a third party unless it is essential to its operation as a supplier.

Following the publication of the provisional order Simon Dowse, director at Foxglove, said the company would work with the regulator to respond to the requirements of the provisional order.

Dowse added however that he believed Ofgem was “covering their backs” from the negative media coverage resulting from the energy crisis.

“So the pendulum has swung from probably little or no oversight to a heavy hand and I think this is their coping mechanism as it were. So for us, it’s business as usual, we’re up to date, we’ve got no debts, we’re making payments. We continue to trade, we’re trading each day…we continue to carry on as normal,” he told Utility Week.