Fuel retailers face fines if they fail to be more transparent on pricing, Energy Secretary Claire Coutinho has announced.

The Department for Energy Security and Net Zero (DESNZ) said it will grant new powers to the Competition and Markets Authority (CMA) to monitor pump prices and report “any sign of malpractice to the Government”.

The move is aimed at improving competition in the market.

Fuel retailers will be required to “come clean on how much they are charging customers on their forecourts versus their profits”, the DESNZ said.

Those that fail to comply could face a fixed fine from the CMA of up to 1% of their worldwide turnover, or an ongoing fine of up to 5% of daily turnover.

A CMA investigation found that some supermarket fuel retailers failed to pass on reductions in wholesale costs last year, charging drivers 6p more per litre for fuel.

This amounted to £900 million in extra costs in 2022 alone.

Motoring services company the RAC recently accused major retailers of increasing margins on fuel, and urged them to cut petrol prices by 5p per litre to reflect lower wholesale costs.

Ms Coutinho said: “At a time when many were struggling with increased living costs, we saw shocking behaviour from some fuel retailers who failed to pass on savings at the pump.

“Now we are cracking down on any petrol station bosses found to be unfairly hiking up their prices.

“That’s why we’re giving the CMA new powers to bring fairness back to the forecourts and make sure UK drivers get a competitive fuel price.”

Many retailers have already voluntarily increased transparency over their costs.

Twelve of the biggest retailers, including all four fuel-selling supermarkets, have signed up to a CMA scheme to share daily price data.

The CMA will receive its new information-gathering powers through amendments tabled on Wednesday to the Digital Markets, Competition and Consumer Bill, which are expected to come into force next year.

The watchdog will use the data to provide regular public updates on the state of competition in the UK fuel market, as well as report evidence of unjustified price increases.

Steve Gooding, director of motoring research charity the RAC Foundation, said: “This is good news for drivers and, though it might not immediately seem like it, retailers too.

“With persistently high pump prices over the past couple of years, greater transparency about pricing and a keener eye on profit margins should end some of the suspicion that has grown up between fuel companies and the 30 million-plus motorists – not to mention businesses – who rely on their products.”