The UK Office of Gas and Electricity Markets (Ofgem) has, for the first time, used its powers to fine a firm over £5.4m for failure to record and retain electronic trading communications. Between January 2018 and March 2020 the firm did not record or retain the communications made by wholesale energy traders, on privately-owned phones via WhatsApp, which discussed energy market transactions. The initial fine was £7,730,213 but as the firm admitted the breach and agreed to settle the matter, the fine was discounted by 30% and, accordingly, the penalty was reduced to £5,411,149.
Ofgem’s powers come from the Enforcement Regulations which provide the regulator with the powers to monitor, investigate, enforce, and sanction. Regulation 8 of the Enforcement Regulations sets out the legal requirement on market participants to record and retain records and specifically requires wholesale energy market participants to take reasonable steps to ensure that any electronic communications about trading wholesale energy products are recorded and retained, and to take reasonable steps to prevent electronic communications taking place which cannot be recorded.