Managing conflicts of interest

At Ofgem, we expect our staff to carry out their roles with honesty, fairness and openness. They should follow the Civil Service code and be free from any influence or bias.

We are committed to making sure interests are recognised, declared and managed appropriately so that we can fulfil our duties as an energy regulator.

By following this policy, we can clearly demonstrate that our decisions are not influenced by private interests.

About the policy

Our conflicts of interest policy details:

• types of interests, including those that are absolutely prohibited
• how we identify and manage conflicts
• when an interest should be declared and resolved

Definition of conflict of interest

A conflict of interest is when a person has an interest or is in a situation that may, or could be perceived to, impact their ability to do their job properly. This includes situations where someone is in a position to:

• be influenced by others, or other interests
• exploit their role for personal gain
• exploit their role for the benefit of others

There are 3 types of conflicts.

Actual conflict

This is where there is an opportunity to be influenced by a financial, personal or political interest, or their judgement could be affected while carrying out their duties.

Perceived conflict

This is where it may look like they could be impacted by interests and have their judgement affected as a result.

Potential conflict

This is where an interest that was not initially a conflict can become one in the future.

Who should follow this policy

Anyone working for or on behalf of Ofgem must follow the policy whether they are employed as:

• permanent, casual, fixed term or agency staff
• a contractor
• a non-executive director
• a retained consultant
• a secondee

There may be restrictions in place for executive and non-executive directors due to their role and the influence they have on Ofgem. The interests of our board and directors are published on our website. Some rules in our policy may also apply to future staff.

Staff must declare interests involving dependents such as a spouse, unmarried partner, civil partner or children.

Furthermore, staff should also be aware of potential conflicts that might arise involving non-dependent family, friends, and wider acquaintances. They should declare anything that could be perceived as a conflict through their personal relationships outside of family.

Dependents will need to sell shares in regulated companies, however, friends do not. If a staff member’s friend is employed by an organisation we work closely with, then these potential conflicts should also be assessed and addressed if relevant.

Types of interests

Interests could be financial or non-financial and related to personal relationships or politics.

Conflicts do not just relate to the companies we regulate. They could involve holding an interest in a company where the primary business activity is linked to the energy industry or supplying goods and services to Ofgem.

All staff are prohibited from engaging on behalf of Ofgem with organisations or individuals with which they have an interest.

Secondary employment

Secondary employment is when an individual is also employed by another organisation while working at Ofgem.

Managing conflicts of interests is crucial for staff that hold secondary employment or external roles, including board memberships, advisory roles or voluntary positions.

Even if there is no actual conflict, the perception of a conflict can damage Ofgem’s reputation and must be considered.

Declaration and approval

All staff, including anyone new joining Ofgem, must declare if they have secondary employment or hold any external roles. They must also notify their line manager for such positions in writing.

Ofgem can refuse or withdraw permission to continue with their secondary employment if a conflict of interest is identified. In such circumstances, an appropriate resolution will be agreed depending on the nature of the conflict.

Conditions for holding a secondary employment

Secondary employment must not:

• interfere with our regulatory responsibilities
• interfere with a staff member’s contractual obligations to Ofgem
• involve any organisation regulated by, or with commercial interests in, the energy sector linked to Ofgem’s role as a regulator
• allow for the misuse of confidential or privileged information gained through employment at Ofgem
• allow for a perception of bias, preferential treatment, or divided loyalty

Safeguards and monitoring

Staff must immediately report any change in their circumstances that could affect the original conflict assessment.

We may review approved arrangements. We have the right to reassess or withdraw approval at any time.

Staff may be asked to recuse themselves from specific duties or decisions where a conflict or perceived conflict exists.

Transparency and accountability

We will record all declarations and decisions in accordance with our governance procedures.

Failure to properly disclose or manage a conflict of interest may lead to disciplinary action. Some severe cases may lead to dismissal, for example:

• knowingly withholding information
• failing to seek approval
• continuing in a secondary role after permission has been withdrawn

Post-employment considerations

Staff must comply with our business appointment rules. We may place restrictions on staff taking certain jobs after leaving Ofgem. This is more likely for jobs where there is a risk of former employees exerting undue influence on Ofgem or having had access to sensitive information they could use to their benefit.

For example, restrictions could be placed on lobbying, joining organisations regulated by Ofgem, or using confidential information obtained during employment.

Financial interests

A financial interest can be direct or indirect and is anything that has a monetary value. An individual could gain financially from:

• trading financial instruments
• selling knowledge
• influencing a decision or knowledge of a decision before it enters the public domain
• shares in energy companies or energy-related entities, including preference shares
• secondary positions or income channels, for example consultancy, commissions, directorship
• infrastructure investment funds or schemes
• investments in crowdfunding linked to the energy industry
• procurement activity
• engaging with organisations from a previous employment
• gifts and hospitality
• participating in an environmental scheme we administer
• future share options
• forgiveness of debt
• property
• intellectual property rights

Certain financial interests are absolutely prohibited for all Ofgem staff, for example:

• pursuing any activity, holding any position or office with, or holding shares or other interests in energy companies licenced by Ofgem
• investing in infrastructure, private equity, or pension funds where they manage the investment, if they have or are likely to have investments in any companies licensed by Ofgem

Staff can take part in pension funds or similar investment schemes that might hold shares in electricity or gas companies if they do not control the investment decisions.

Similarly, interests in broad exchange-traded funds (ETFs) such as FTSE100, S&P500 or All-World trackers are allowed. However, anything more specific to the energy sector should be considered carefully.

If in any doubt, financial interests should be declared so advice can be given as to whether a conflict exists or not.

Non-financial interests

Non-financial interests include, but are not limited to opportunities relating to:

• access to privileged information or facilities at Ofgem
• favourable treatment of an individual or company in return for a benefit, such as buying goods or services from an organisation where the staff member has connections
• favourable treatment of an individual or company because the staff member previously worked for them, such as awarding a procurement contract
• securing a favourable decision for a political party or other non-political bodies for personal enhancement within that organisation
• gifts or hospitality, for example access to sporting events and functions
• membership of organisations and societies
• securing any of the above benefits for family or friends

Personal relationship interests

A personal relationship interest is where a staff member has a close relationship with someone or a business with an interest in Ofgem. This could be a partner (business partner or associate), family member or someone who could apply to work at Ofgem.

Personal interests include but are not limited to:

• employing relatives in the same department as a current staff member
• having close relationships with people participating in environmental schemes we administer
• partners and dependents who work for companies we regulate, or who participate in Sharesave schemes in those companies
• relationships with people who represent businesses that we buy goods or services from

We will assess personal relationship interests on a case-by-case basis. Our decision will depend on:

• what the relationship is and how close it is
• the nature of the interest
• whether the individual may be, or could be perceived to be, biased due to the relationship

Political interests

As civil servants, Ofgem staff are restricted from taking part in some political activities. These are set out in section 4 of the Civil Service Management Code.

Staff can participate in most political activities depending on their role and if this meets Ofgem’s rules, for example:

• staff at grade 2a or below can participate in most political activities with approval from Ofgem
• staff at grade 2b or above cannot take part in national political activities but may ask permission to take part in local activities

Personal views should not interfere with official duties.

Staff are entitled to be members of political parties. They do not need to declare membership.

Non-party political activity

Restrictions may apply to non-party political activities like:

• demonstrating on behalf of a pressure group, charity, or similar body
• representing a pressure group, charity or similar body in the media or elsewhere

Where such conflicts exist, we will provide guidance on how to resolve them appropriately to protect the individual and the organisation.

When an interest should be declared

Before joining Ofgem, new staff must read about the declaration of interest process and requirements.

They must tell us about any conflicts of interest ahead of their start date. This makes sure they are aware of any actions required before their contract begins.

For example, if they hold any shares in an energy company, they will need to be aware that these will need be sold within 6 months of their declaration. There may also be other scenarios outside of the examples we have mentioned.

While working at Ofgem, all staff must follow the policy. They must resubmit a declaration every year through our HR system, stating that the information they have provided is up to date. 

If they become aware of any changes in their circumstances, they must inform us of this change as soon as possible. They should use their own judgment to make sure no direct or perceived conflicts could arise.

Breaching the policy and failing to report or resolve a disclosed conflict could lead to disciplinary action. If there is any uncertainty, staff are encouraged to complete a declaration of interest form for review as a precautionary measure.

Resolve a declared interest

Staff are responsible for resolving declared interests, along with their line manager where appropriate.

Each conflict of interest is reviewed on a case-by-case basis. The steps taken to resolve the interests and how long it takes to resolve may be different based on the individual’s circumstances.

Making decisions on conflicts of interest 

All declarations are reviewed and processed confidentially on a case-by-case basis. Where appropriate, corporate services and legal teams may be involved.

It is difficult to define all the situations where a conflict of interest might occur. We may consider:

• the staff member’s position in the organisation
• the nature of the interest or relationship
• how the interest may be perceived externally

We will email individuals our decision. If they disagree with a decision, they can appeal and provide further relevant information to support their case. We may escalate cases to senior management for a final decision.

Everyone at Ofgem is responsible for assessing their own personal circumstances and declaring their conflicts of interest.