British Gas owner says energy bosses should face ‘fit and proper’ test as consumers face £2bn crisis bill

Published

4 years ago

October 15, 2021

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The head of British Gas owner Centrica has called for a “fit and proper” test for executives running energy firms after a series of insolvencies prompted by high gas price crisis that are set to leave consumers with a £2bn bill.

Chris O’Shea, chief executive of the energy giant, called for changes to ensure that it never happens again.

The spike in wholesale gas prices has seen 12 smaller suppliers collapse since the start of September alone, affecting nearly two million customers.

The volatile situation this week prompted Centrica to postpone an investor event scheduled for November, citing the “unprecedented commodity price environment”.

Mr O’Shea told Sky News: “Around one third of suppliers in the market have gone out of business this year so far.

“It’s incredibly distressing for consumers and there’s a huge cost to that.

“We have to make sure this doesn’t happen again.”

Some have pinned the blame on smaller firms’ business models – which might see them buy energy at volatile “spot” prices rather than smoothing out costs by purchasing contracts for future delivery.

The surge in wholesale gas prices to record levels catches out such companies because they have to buy the expensive gas only to sell it to customers who are contracted to pay a cheaper rate.

British Gas – Britain’s biggest supplier – and other large rivals are picking up the pieces under industry rules which sees regulator Ofgem select one of them to take on customers of each of those companies that cease trading.

Shortfalls in the money needed to pay for their energy will be met by an industry-wide levy, ultimately paid for by all household customers.

Mr O’Shea told Sky’s Ian King Live the sum was already estimated at £2bn.

He said he could not give an estimate for how many more suppliers would go out of business but said those that had not hedged or maintained customer deposits would “find it very hard to survive this winter”.

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Mr O’Shea said that in cases when account deposits made by customers to collapsed suppliers have already been spent they have to be “made good” by the bigger companies such as British Gas that pick the customers up.

Those companies also have to buy the gas and electricity the companies need on the wholesale market.

“The cost over the winter alone for each customer is around £700,” he said.

“The customer credit balances that have been spent by these customers that have gone under is £400m.

“There’s about two-and-a-half million customers, who each attract a cost of £700, so already the cost of this over £2bn.”

The money is recovered by Centrica and others through a two-year levy spread across every energy customer’s bill, Mr O’Shea said.

He added: “I think it’s incumbent on the regulator to make sure that every company in our sector can deliver on the promises they make to customers.

“It’s very, very simple and we have to make sure this never happens again.

“There’s a number of ways that you can do that.

“You can either hedge – you can lock in the price in the market – or you can make sure that you’ve got enough money if you don’t hedge so when prices rise that you can make good on that commitment.”

Mr O’Shea brushed off the idea that things would have been better if energy companies were in public hands, suggesting that the current issues did not turn on the question of whether the sector was privatised or nationalised.

“What today’s issues show is that the sector has to be properly regulated,” he said.

“We have to make sure that those people that run energy companies have to pass a fit and proper persons test like you do if you’re in the banking or financial services business.”

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Tesla approves $29bn share award to Elon Musk

Published

21 hours ago

August 4, 2025

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Tesla approves bn share award to Elon Musk

Tesla’s board has signed off a $29bn (£21.8bn) share award to Elon Musk after a court blocked an earlier package worth almost double that sum.

The new award, which amounts to 96 million new shares, is not just about keeping the electric vehicle (EV) firm’s founder in the driving seat as chief executive.

The new stock will also bolster his voting power from a current level of 13%.

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He and other shareholders have long argued that boosting his interest in the company is key to maintaining his focus after a foray into the trappings of political power at Donald Trump‘s side – a relationship that has now turned sour.

Musk is angry at the president’s tax cut and spending plans, known as the big beautiful bill. Tesla has also suffered a sales backlash as a result of Musk’s past association with Mr Trump and role in cutting federal government spending.

The company is currently focused on the roll out of a new cheaper model in a bid to boost flagging sales and challenge steep competition, particularly from China.

The headwinds have been made stronger as the Trump administration has cut support for EVs, with Musk admitting last month that it could lead to a “few rough quarters” for the company.

Tesla is currently running trials of its self-driving software and revenues are not set to reflect the anticipated rollout until late next year.

Musk had been in line for a share award worth over $50bn back in 2018 – the biggest compensation package ever seen globally.

But the board’s decision was voided by a judge in Delaware following a protracted legal fight. There is still a continuing appeal process.

Earlier this year, Tesla said its board had formed a special committee to consider some compensation matters involving Musk, without disclosing details.

The special committee said in the filing on Monday: “While we recognize Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging… we are confident that this award will incentivize Elon to remain at Tesla”.

It added that if the Delaware courts fully reinstate the 2018 “performance award”, the new interim grant would either be forfeited or offset to ensure no “double dip”.

The new compensation package is subject to shareholder approval.

Business

Motor finance operators can breathe big sigh of relief

Published

21 hours ago

August 4, 2025

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Motor finance operators can breathe big sigh of relief

Bank stocks have enjoyed a boost as traders digest the Supreme Court’s ruling on the car finance scandal.

Some of the country’s most exposed lenders, including Lloyds and Close Brothers, saw their share prices jump by 7.55% and 21.62% respectively.

It came after the court delivered a reprieve from a possible £44bn compensation bill.

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Banks will still most likely have to fork out over discretionary commissions – a type of commission for dealers that was linked to how high an interest rate they could get from customers.

The FCA, which banned the practice in 2021, is currently consulting on a redress scheme but the final bill is unlikely to exceed £18bn. Overall, the result has been better than expected for the banks.

Lloyds, which owns the country’s largest car finance provider Black Horse, had set aside £1.2bn to cover compensation payouts.

Following the judgment, the bank said it “currently believes that if there is any change to the provision, it is unlikely to be material in the context of the group”.

The judgment released some of the anxiety that has been weighing over the Bank’s share price.

Jonathan Pierce, banking analyst at Jefferies, said the FCA’s prediction was “consistent with our estimates, and most importantly, we think it largely de-risks Lloyds’ shares from the ‘motor issue'”.

Bank stocks have responded robustly to each twist and turn in this tale, sinking after the Court of Appeal turned against them and jumping (as much as 8% in the case of Close Brothers) when the Supreme Court allowed the appeal hearing.

Concerns about this volatility motivated the Supreme Court to deliver its judgment late in the afternoon so that traders would have time to absorb the news.

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FCA considering compensation scheme over car finance scandal – raising hopes of payouts for motorists

Published

2 days ago

August 3, 2025

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FCA considering compensation scheme over car finance scandal - raising hopes of payouts for motorists

Thousands of motorists who bought cars on finance before 2021 could be set for payouts as the Financial Conduct Authority (FCA) has said it will consult on a compensation scheme.

In a statement released on Sunday, the FCA said its review of the past use of motor finance “has shown that many firms were not complying with the law or our disclosure rules that were in force when they sold loans to consumers”.

“Where consumers have lost out, they should be appropriately compensated in an orderly, consistent and efficient way,” the statement continued.

The FCA said it estimates the cost of any scheme, including compensation and administrative costs, to be no lower than £9bn – adding that a total cost of £13.5bn is “more plausible”.

It is unclear how many people could be eligible for a pay-out. The authority estimates most individuals will probably receive less than £950 in compensation.

The consultation will be published by early October and any scheme will be finalised in time for people to start receiving compensation next year.

What motorists should do next

The FCA says you may be affected if you bought a car under a finance scheme, including hire purchase agreements, before 28 January 2021.

Anyone who has already complained does not need to do anything.

The authority added: “Consumers concerned that they were not told about commission, and who think they may have paid too much for the finance, should complain now.”

Its website advises drivers to complain to their finance provider first.

If you’re unhappy with the response, you can then contact the Financial Ombudsman.

The FCA has said any compensation scheme will be easy to participate in, without drivers needing to use a claims management company or law firm.

It has warned motorists that doing so could end up costing you 30% of any compensation in fees.

The announcement comes after the Supreme Court ruled on a separate, but similar, case on Friday.

The court overturned a ruling that would have meant millions of motorists could have been due compensation over “secret” commission payments made to car dealers as part of finance arrangements.

The FCA’s case concerns discretionary commission arrangements (DCAs) – a practice banned in 2021.

Under these arrangements, brokers and dealers increased the amount of interest they earned without telling buyers and received more commission for it. This is said to have then incentivised sellers to maximise interest rates.

In light of the Supreme Court’s judgment, any compensation scheme could also cover non-discretionary commission arrangements, the FCA has said. These arrangements are ones where the buyer’s interest rate did not impact the dealer’s commission.

This is because part of the court’s ruling “makes clear that non-disclosure of other facts relating to the commission can make the relationship [between a salesperson and buyer] unfair,” it said.

It was previously estimated that about 40% of car finance deals included DCAs while 99% involved a commission payment to a broker.

Nikhil Rathi, chief executive of the FCA, said: “It is clear that some firms have broken the law and our rules. It’s fair for their customers to be compensated.

“We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal.”