The United Kingdom's competition regulator has urged heating oil suppliers to compensate customers who were overcharged during a period of soaring prices at the start of a Middle East conflict. The Competition and Markets Authority (CMA) launched an investigation into the heating oil market after prices nearly tripled for some consumers.
The CMA found that approximately 1,700 customers may have been affected by potential breaches by their suppliers, leading to overpayments of between £150 and £350 for their heating oil. While some suppliers have agreed to compensate affected customers, the CMA expressed disappointment that not all have complied voluntarily and indicated that court-based enforcement action is being prepared against those who refuse.
Heating oil is primarily used by households in rural areas not connected to the gas grid. These consumers rely on kerosene stored in tanks on their property, making them vulnerable to price volatility. Unlike consumers connected to the gas grid, who are often protected by regulatory price caps or fixed tariffs, heating oil users are exposed to daily price fluctuations.
The CMA's probe determined that, overall, suppliers did not "profit materially from the crisis." However, the investigation highlighted significant gaps in consumer protections within the domestic heating oil market, which is largely unregulated. This lack of oversight becomes particularly problematic during periods of market volatility.
In its findings, the CMA observed that heating oil prices were lowest in Northern Ireland, while customers in more remote areas, including parts of Scotland, faced higher prices due to limited supplier choice. The regulator is proposing new requirements for suppliers, including registration, adherence to minimum standards for price quoting and order cancellations, and providing access to independent dispute resolution for households. Suppliers will also be required to clearly present payment plans and minimum purchase volumes, and to establish a register for vulnerable households.
Furthermore, the CMA is recommending a review of regulations concerning minimum order volumes to enable consumers to purchase smaller quantities of heating oil. Sarah Cardell, chief executive of the CMA, emphasized the basic need for reliable home heating and hot water. She stated that while the market is generally competitive, additional safeguards and regulatory oversight are necessary to ensure fair treatment, clear information, and appropriate support for all consumers, especially those in areas more exposed to price volatility and vulnerable households.