Ofgem published a call for input on its proposals to establish a framework of consumer outcomes as part of its regulatory framework to encourage improvements in consumer experiences and meet its statutory objectives.
In our response, we welcomed Ofgem’s work to develop consumer outcomes and specifically draft debt and vulnerability outcomes. We argued that falling energy affordability and consumer financial resilience had exposed consumer protection weaknesses in Ofgem’s regulatory framework, which had not kept pace with the severity of problems experienced by vulnerable customers.
The response notes some inconsistency in Ofgem’s regulatory approach: its stated intentions, like those in its energy debt ‘reset and reform’ work, has not always led to effective regulatory design and action. We pointed to examples such as stalled plans to strengthen debt management rules and the shift in the focus of the proposed debt relief scheme toward repayment focused measures.
StepChange sees value in an outcomes based regulatory framework but argues that Ofgem needs to better articulate how these outcomes fit within an overarching regulatory structure. Drawing on experience with the FCA’s Consumer Duty, they suggest that strong high level principles must sit alongside detailed rules, and that outcomes alone cannot deliver effective oversight: outcomes should complement prescriptive rules where appropriate, not replace them.
We highlighted that ambiguities in rules can allow suppliers to work around expectations, compounded by limitations in Ofgem’s monitoring and enforcement. Prescriptive rules remain essential in areas where risks to consumers are high, while outcomes and principles can shape supplier culture and reinforce expectations rather than replace specific requirements.
We broadly agreed with the proposed debt and vulnerability outcomes but highlighted that these high level outcomes need to be articulated in more detailed supporting guidance than is yet in place.
We disagreed that a voluntary outcomes framework would be appropriate, citing failed attempts to create a voluntary code on debt and affordability as clear evidence that key protections cannot rely on supplier goodwill. We cautioned against blunt efforts to reduce ‘regulatory burdens’, arguing that well designed regulation should take precedence over targets to cut rules.
Finally, we argued that meaningful reform ultimately requires stronger statutory duties for Ofgem and a balance between clear high level consumer focused principles and detailed rules where appropriate, and a long term solution to energy affordability, without which poor outcomes are likely to persist regardless of changes to the regulatory framework.