Martin Lewis says we can't play fast and loose with energy market as Ofgem announces licensing review

Martin Lewis has responded to Ofgem’s announcement that it will review whether consumers have proper protections against poor customer service and financial instability.

Martin Lewis, founder of MoneySavingExpert.com and Cheap Energy Club said: "I’m delighted to hear this news. When the Head of Ofgem Dermot Nolan asked me, when we met a few months ago, what they could do to encourage switching to smaller firms, this was exactly my suggestion. The raft of small providers has actually risked damaging people’s confidence. They do a comparison and see a host of firms they’ve never heard of – which instantly makes people wary. Then they hear horror stories from the likes of Iresa and instead of scrolling down to find a supplier with decent service, they just give up.

"Encouraging competition is great, but it has to be effective competition and people need a level of quality assurance. The test I suggested Ofgem introduce was threefold. First, that a ‘fit and proper person’ test applies to those setting up energy firms. Second, that a company has the financial resources to run it – this seems like stating the bleeding obvious but setting up an energy firm is not a minor undertaking and so we need to ensure the finances are in place. And finally we need to ensure firms have the capacity to deal with the numbers of customers they are trying to attract – and if not their numbers should be capped.

"Do all this and then when people ask if they can trust a small energy firm, there is at least a minimum standard they know is in effect in order for that supplier to have received the licence in the first place. Energy is a public good, we can’t play fast and loose with it."