Ofgem told us that issues began to emerge with the financial resilience of new entrants in 2018 and in response it decided first to stop firms who did not have a resilient business model from entering the market, and then determine the ongoing requirements that suppliers already in the market would have to meet. In July 2019, Ofgem started carrying out a qualitative assessment of information provided by potential new entrants. Ofgem introduced new requirements for existing firms in January 2021, including a new financial responsibility principle that made it a legal requirement for suppliers to manage costs that would be mutualised in the event of supplier failure.13 Ofgem told us that with hindsight requirements should have been tighter, but said that it took a long time to raise requirements for firms already operating in the market because it had to balance the need to keep companies financially resilient with ensuring that there was sufficient diversity in the market. This included making sure that the market attracted new entrants and developed new and changing tariffs. It explained that getting this balance right meant that the nature of Ofgem’s ongoing monitoring requirements was a controversial topic within the sector and the length of negotiations reflected the complexity of discussions.14