The boss of the UK’s largest energy supplier has called for the sector’s chief executives to be regulated like bankers, despite the government’s high-profile drive to slash red tape in a bid to boost the economy.
During an evidence session with the Energy Security and Net Zero Committee, Centrica’s Chris O’Shea told MPs he was “all for” energy watchdog Ofgem bolstering its remit to include regulation of him and his fellow chief executives, saying it could help governance in the industry.
“I think anything that means we feel more accountable, and were held more accountable, and which professionalises our sector, and requires us to have properly capitalised companies that are run by fit and proper people… has got to be applauded,” he told MPs.
Both the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are responsible for overseeing the behaviour and suitability of senior bosses at firms in their purview, under rules introduced in the wake of the financial crisis.
Energy bosses should pass ‘fit and proper persons’ test
The Senior Managers Regime requires all new appointments to key senior banking and investment positions to be approved by the FCA or PRA before the individual can start.
The regime has drawn sharp criticism from City figures, complain the process is too burdensome and takes too long. And in a bid to meet the governments deregulation drive, both watchdogs are weighing whether to streamline the application process and water down some of its more stringent checks.
Despite the consultation – and the fact it would mean he and his colleagues would be subject to more stringent checks – O’Shea said he was “all for… a fit and proper persons test” in the electricity and gas industry.
“There’s an argument for us [bosses] to have far better regulation,” he told MPs at an evidence session with five top energy bosses. “I feel very responsible for everything we do as a company. If we get it wrong – and… I’ve given up bonuses and my bonuses have been changed – so there are implications for me personally.”
Ofgem’s regulation of the energy sector has come under intense scrutiny since the gas shock of 2022 led to the failure of 30 suppliers in the space of a few years. Its bungling of the crisis resulted ministers announcing a boardroom reset, which included a hunt for new chair and four new non-executives.