By Nicholas Earl
Troubled energy firms have been in the crosshairs of Ofgem this year, which has finally begun a much-needed spring clean on the crisis-stricken sector following the collapse of 30 suppliers over the past two years.
Hefty fines, stinging market compliance reviews and public criticisms of dividend payouts have been the bread and butter of an increasingly mission-driven energy regulator.
But the watchdog seemed to be barking up the wrong tree this morning, when it slapped a bank with an eye-watering £5.4m fine for not recording and retaining electronic communications between January 2018 and March 2020.
You’d bee forgiven for scratching your head, and asking why wasn’t a financial or banking regulator taking action here?
The US Securities and Exchange Commission has handed out $1.8bn worth of fines to 16 lenders including Goldman, Citi, and Morgan Stanley, and the Financial Conduct Authority quizzed the country’s top lenders about their use of Whatsapp by staff following the US clampdown.
Yet, such a fine does technically fall within its jurisdiction.
The communications that weren’t retained in this case relating to trading wholesale energy products.
Ofgem has powers to investigate and sanction against market manipulation and insider trading under so-called “Remit Enforcement Regulations,” government-backed regulations which are designed to protect consumers and ensure market transparency and integrity.
This raises the possibility it could trigger a wider clampdown, with compliance experts warning companies to get their ducks in row.
But given the infringement was linked to communications trading wholesale energy products, there is only limited scope for Ofgem to get involved.
Furthermore, an increasing number of banks and financial services have moved to ban their staff from using encrypted messaging apps such as Whatsapp for work purposes after the slew of fines.
For now, Ofgem’s foray into the world of banking feels like a one-off, but it remains to be seen whether it could go after more energy firms for such breaches.
