In its response, published on 13 October, the Government backed the CMA’s call for greater consumer protection, including a potential authorisation regime for heating oil distributors, stronger support for vulnerable households and improved access to independent dispute resolution.
However, the report is more policy direction than implementation plan, with the Government yet to establish a timetable, detailed requirements or likely implications for distributors.
Importantly, the Government also acknowledged the CMA’s finding that the heating oil market is generally competitive and that the sharp price increases experienced earlier this year largely reflected rising wholesale costs rather than excessive supplier profits.
It also recognised that regulation must not become so burdensome that it drives smaller distributors out of the market and confirmed that it is not proposing to introduce a heating oil price cap comparable to that operating in the gas and electricity markets.
Consumer protection consistency
The CMA proposed a mandatory code of conduct, access to alternative dispute resolution, arrangements to identify vulnerable customers and regulatory monitoring and enforcement. The Government has agreed in principle, arguing that greater consistency in consumer protection is needed.
However, it also recognises the need to avoid imposing disproportionate burdens on businesses, acknowledging that fewer suppliers operating in the market could weaken competition.
The detailed structure of the framework, its potential costs and the timescale for implementation remain undecided.
Working with industry
While the longer-term regulatory framework is developed, the Government has agreed to work with UKIFDA, Ofgem and other industry organisations to strengthen existing codes of conduct, consumer protection initiatives and access to dispute resolution.
The CMA also recommended clearer signposting of available payment plans, minimum delivery volumes and the reasons for those minimums.
The Government has accepted this recommendation, although the requirements are yet to be translated into a revised code of conduct.
Minimum delivery volumes under review
The Government has also agreed to review whether smaller heating oil deliveries are unnecessarily restricted in the current market.
The Government will consider whether the application of existing rules limits consumer choice and whether any changes would be appropriate. For distributors, smaller deliveries could provide greater flexibility for customers struggling with upfront heating costs, but may also have implications for delivery efficiency, route economics and operating costs.
No specific regulatory changes have been announced.
Price transparency and regional differences
The CMA’s suggestion of a temporary heating oil price comparison service for Great Britain, modelled on the Consumer Council for Northern Ireland’s price checker, remains under consideration.
The Government acknowledged that commercial comparison services generally provide useful price transparency but may offer less consistent coverage during periods of market volatility or in remote areas. It intends to undertake further assessment before deciding whether a government-supported service is necessary.
The Government has also agreed to consider regional pricing and supply data when designing future consumer support measures, particularly for households facing higher costs or limited supplier choice.
These proposals do not currently impose new pricing or reporting obligations on distributors.
Industry response
Responding to the announcement, UKIFDA said it stands ready to work constructively with ministers, officials and other stakeholders on implementing the CMA’s recommendations.
The association reiterated the CMA’s conclusion that the market is generally competitive and that distributors had not materially benefited from the significant price increases experienced during the period of energy market disruption.
It also emphasised the industry’s exposure to international markets, with distributors generally purchasing fuel frequently at prevailing wholesale prices.
UKIFDA said: “We welcome continued dialogue with Government and other stakeholders to ensure that any future measures are evidence-based, proportionate and deliver tangible benefits for consumers.”
The association reaffirmed its commitment to high standards of customer service, transparency and consumer protection.
Following the announcement, Tim Buckman, Chief Executive of BoilerJuice, emphasised the importance of strong consumer protection but suggested the main problem is that heating oil is twice as expensive as it was before the war: “Just putting regulation in place is not going to reduce the price for customers. What we would like to see is the VAT off heating oil.”
What happens next?
Although the Government has accepted the direction of the CMA’s recommendations, significant questions remain about their implementation. There is no timetable for the introduction of any formal regulation and no explanation of how existing industry arrangements might be incorporated into a new framework.
Further clarity is also needed on the handling of vulnerable customer information, practical requirements for smaller deliveries and the scope of any additional compliance or reporting obligations.
The Government has committed to further engagement with regulators, industry bodies and consumer organisations before determining the way forward.
For distributors, the extent and timing of any resultant operational changes remain uncertain.
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