Ofgem has announced it will review its regulatory framework to meet consumers’ needs and boost innovation.
It aims to make the retail energy market regulation flexible enough to allow consumers to benefit from innovation in the UK’s energy market.
The regulator stated it will rely more on principles and less on “prescriptive” rules to manage the changes in the energy market.
This will make suppliers comply with rules and think harder about how to best meet consumers’ needs.
Dermot Nolan, Ofgem’s Chief Executive said: “Moving towards regulating the market through greater use of principles is vital to unlock benefits for consumers and ensure they are protected from new risks. As the market evolves, we need to re-think the way we regulate the market. Just adding more and more detailed rules will mean consumer protection always lags behind market developments and risks stifling innovation.
“Regulations that rely on principles, supported by enhanced monitoring of suppliers’ activities, will allow those suppliers who treat consumers fairly the space to innovate but those hoping to gain from misleading consumers or treating them poorly will find our approach very uncomfortable and will face tougher action.”