Government to regulate heating oil market as record numbers apply for £9,000 heat pump grant

The government has accepted the Competition and Markets Authority's recommendation to regulate the heating oil sector for the first time, the Department for Energy Security and Net Zero said on 13 October.

The department said the reform aims to formalise the standards consumers should expect from suppliers, protect vulnerable households and give people clearer routes to compensation when things go wrong. It will now work with industry to develop a regulatory regime for the market.

In the short term, the government said consumer protections in the industry Codes of Conduct will be strengthened. Industry practices that set minimum order volumes of 500 litres for some customers will also be reviewed.

Polly Billington, Minister for Energy Consumers, said: "Thousands of heating oil customers felt they had nowhere to turn when they paid the price of rising oil and gas costs earlier this year."

She added: "That's why we will reform the sector, holding heating oil suppliers to account and giving consumers confidence that they will get a fair deal."

The CMA's findings

The CMA recommended on 15 July 2026 that the UK and devolved governments strengthen protections for the 1.5 million households it said rely on heating oil. It found the market generally competitive but said that was not enough to ensure good outcomes for all.

The CMA said its analysis showed around 1,700 customers were affected, and that some people may have paid between £150 and £350 more for their heating oil as a result.

In August the regulator said around 800 customers had already been notified of compensation. Those who paid more for replacement oil will receive a payment covering the difference between the original and replacement order.

Alongside the review of minimum order volumes, the CMA's recommendations covered a review of the rules and regulations around them.

No price cap

In its formal response, the government said it recognises and accepts the CMA's findings and that a proportionate regulatory regime is "the only sustainable way to address the gaps in this market".

It said it is not proposing simply to replicate the gas and electricity price cap for heating oil. As an interim priority it agreed to work with industry to strengthen consumer protections. The response gave no deadline for the new regime, saying the government will spend time getting it right.

Emergency support

The government said it provided £53m in immediate support for vulnerable heating oil customers during the price spike. The Chancellor announced the package, described at the time as over £50m, on 16 March 2026. In England the money was distributed by local authorities through the Crisis and Resilience Fund.

Nation	Allocation
England	£27m
Northern Ireland	£17m
Scotland	£4.6m
Wales	£3.8m

Heat pump uptake

The department also pointed to the Boiler Upgrade Scheme as extra support for heating oil customers to move to clean energy. From 21 July 2026 the grant for heating oil households in England and Wales rose by 20%, from £7,500 to £9,000. The government said in June that leaflets would go to 200,000 eligible homes.

Charlotte Lee, chief executive of the Heat Pump Association UK, said at the time that the £1,500 uplift would make the transition significantly more affordable for oil-heated homes.

According to the department's August release, 8,150 households applied to install a heat pump in July, a record for the scheme. It said that was an 81% increase on June 2026 and 112% up on the same month the previous year. Since launch, 49% of Boiler Upgrade Scheme grants have gone to rural households, the department said.

In August, 1,042 voucher redemptions were for the £9,000 heating oil grant, 32% of the month's total, according to the 13 October announcement.