Notice on energy company insolvencies

IPs who have or may be appointed to energy company insolvencies should be mindful that appointments under the Special Administration Regime are possible.

Concerns were raised about the treatment of customers in previous energy company insolvencies. We would like to remind members that the regulatory framework supports both the fair treatment of customers and the fulfilment of duties under the Insolvency Act. The Act sets out IPs’ primary duties, and the Code of Ethics sets out how these should be achieved, with the Code stating that conduct should not discredit the profession, and IPs should show courtesy and consideration to all parties. This extends to work that is delegated or sub-contracted, so adequate oversight in this area is vital.

IPs should consider any previous arrangements an insolvent energy supplier had with vulnerable customers and flexible repayment plans, and give close consideration to communications (e.g. providing accurate contact details to customers and anticipating high volumes of calls, ensuring measures are in place to deal with them). IPs should be mindful of communication strategies and should not impose undue pressure on clients, and they should consider carefully the prospect of scam activity which targets former energy clients.

Ofgem would also like to reiterate the following:

  • The incoming supplier (a Supplier of Last Resort in appointments made so far) must be provided with the data required for consumer transfer to be as quick and smooth as possible.
  • Ofgem will be paying close attention to fees charged in terms of being fair and reasonable.
  • IPs should support the Citizens Advice Extra Help Unit by quickly providing correct staff contact details in order to help resolve off-supply cases in the Supplier of Last Resort process.
  • Finally, IPs are reminded of Ofgem’s open letters from 2019 and 2020 in relation to customer treatment and back-billing. The letters are below.

Open letter to energy suppliers and insolvency practitioners who undertake charge recovery action | Ofgem (2020)

Open letter to insolvency practitioners appointed to failed Energy Supply companies | Ofgem (2019)