Credit Arrangements Between Wholesalers and Retailers in the New Retail Market

The purpose of this work is to lead on the development and implementation of the final credit arrangements that should be included within the market codes in readiness for the opening of the non-household retail market in April 2017, including supporting the drafting of the new arrangements by MOSL. Our objective is that the market codes will include the appropriate credit terms and arrangements for interactions between wholesalers and retailers.

In particular this should include:

1. Developing proposals to fill the remaining gaps in the credit arrangements, including in particular the value of different forms of credit that need to be included in the codes and the arrangements for moving between different forms of credit in appropriate time periods should the financial standing of market participants change. This needs to be undertaken in a way that retains a fair balance of risk between the wholesaler and the retail entrant around the fixed payment and settlement arrangements set out in the code.

2. Workshopping those proposals with trading parties/market participants and other members of the Open Water programme to maximise buy in to them.

3. Developing, following that engagement with market participants a set of final proposals to be transposed into the codes.

4. Taking those proposals successfully through the Interim Code Panel and implementing them in the final market codes.

It is imperative that the new policy proposals are entirely consistent with our statutory duties as set out in the legislation and support an effective retail market with high levels of rivalry that protects customers.

Scope

One of the final remaining gaps in these codes currently is the credit arrangements between wholesalers and retailers. The current draft codes include provisions to allow a variety of different forms of credit to be posted between retailers and wholesalers, depending on the financial standing and credit risk of the retailer.

However, the precise amounts/values of credit will need to be agreed and formally defined in the codes, as well as the arrangements for retailers to move between the different forms of credit should the financial standing of the retailer change. This contractor will be responsible for leading this work-stream, and in particular will be responsible for:

Analysis, policy development and implementation.