Ofwat and MOSL have issued a joint statement setting out their planned approach in response to Covid-19 and the impact of the second national lockdown in England on the business retail market.
Ofwat and MOSL have issued a joint statement setting out their planned approach in response to Covid-19 and the impact of the second national lockdown in England on the business retail market.
The organisations say their focus continues to be that business customers are protected – including from the risk of systemic retailer failure.
Under the Customer Protection Code of Practice (CPCoP) retailers are required to offer customers who are affected by Covid-19 with a Covid-19 repayment plan, tailored to the individual needs of the affected customer.
Retailers are required to continue to offer Covid-19 repayment plans until 31 March 2021 or such other date as Ofwat may notify in writing to retailers, although the repayment period can be longer than this.
The statement says:
“These requirements on retailers were designed to protect customers – including in response to further restrictions – and we expect retailers to ensure the plans offered to business customers reflect and are tailored to the changing circumstances some of those customers will now find themselves in.”
Ofwat and MOSL have also proposed that the temporary suspension of the invoicing and payment of market performance charges in the business retail market which started in March will again be further extended. The temporary suspension of MPF charges was further extended in July and expired at the end of September for wholesalers in relation to Operational Performance Standards (OPS) and the end of October for retailers and wholesalers in relation to Market Performance Standards (MPS).
“Given the nature of the changes coming into effect this week, we recognise that ‘Business As Usual’ activities, such as meter reading, could be significantly affected for reasons beyond trading parties’ control.
“We recognise that the extent to which such activities will be affected may well vary across the country and between wholesalers. However, as was the case in March, we think that it is unreasonable at this time to financially penalise trading parties for failing to meet market performance standards due to factors outside of their direct control.”
However, there are no plans to extend or reintroduce the temporary sector-specific liquidity support and the application of temporary vacancy flags measures put in place earlier this year to reflect the sudden and unexpected reduced level of consumption.
The temporary support measures were designed to provide retailers with time to access and put in place other forms of support. Ofwat said it has been clear that it expects retailers to use the experience of the first national lockdown to develop contingency plans in preparation for further future restrictions.
In April Ofwat and MOSL set out their intention to monitor the level of bad debt costs that may be emerging in the business retail market and to provide regulatory protections for a portion of the exposure where bad debt across the market is likely to exceed 2% of turnover.
Both organisations will continue to monitor developments and are planning to publish a call for inputs and a further request for information in November, followed by a consultation early in 2021.
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