The energy regulator Ofgem would like you to believe its new measures to ringfence customers’ deposits are “tough”. They certainly ought to be. About £400m of customer money evaporated with the failure of 28 energy suppliers since last September – the coffers only refilled via a charge on all households.
Unfortunately, the regulatory boast of toughness looks premature. A properly robust plan to prevent deposits being used like “an interest-free company credit card”, as Ofgem’s chief executive, Jonathan Brearley, put it, would be adopted immediately. Some suppliers would have to raise equity to replace deposits they have been using as working capital, but a determined regulator would insist that they do.
