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Credit Cover repeat offenders

07 - Credit Cover repeat offenders

  • Proposing Company EDF ENERGY CUSTOMERS LIMITED
  • Status Closed
  • Urgent No
  • Synopsis

    The DCUSA does not effectively deal with repeated offences of credit cover default. Where a
    cover default has lead to a suspension of registrations this may be lifted once the default is
    remedied.

    However a supplier could be in default each month and have its registrations suspended
    each month. The suspension of registrations for a day or so is not effective (as any
    registration requests could wait for such a short period) and is an administrative burden.
    The administrative burden outweighs the effectiveness of the action and does not
    discourage a supplier from entering credit default the following month.

    Where such repeat offences occur e.g. in successive months or so many times in the past
    year, it is clear that the supplier poses an increased risk but the actions that may be
    undertaken do not reflect the increased level of risk.

    It is our experience that the blocking of registrations for a short period of time is not a
    deterrent that stops suppliers going into successive credit default situations.

    It should be noted that the reason for raising this issue largely stems from the
    administrative burden of blocking registrations due to following the DCUSA process
    repeatedly each month and, in our experience, where repeat offences have occurred the
    financial risk has been relatively small (to date). That’s not to say that in the event of a
    large supplier going into credit default the risk wouldn’t be higher and so the need for a
    better mechanism for dealing with repeated offences could have more commercial need.