Utility Warehouse has agreed to pay £1.5m for treating some of its customers unfairly, and increasing their financial distress.
The money will go into Ofgem’s voluntary redress fund, which supports vulnerable customers and finances innovation in the sector.
The energy supplier has accepted it failed to consistently provide debt repayment plans to struggling customers from 2013-2019.
The market regulator opened an investigation after discovering shortcomings in Utility Warehouse’s customer support during an audit in 2018.
Its investigation revealed Utility Warehouse did not reliably offer financing options such as allowing payments to be taken directly from customers’ benefits, or the installation of a pre-payment meter to pay back charges.
Utility Warehouse also admitted during the investigation it provided inaccurate social obligation data to Ofgem during the six year period.
It has now decided to close the investigation after Utility Warehouse agreed to pay £1.5m, and recognised its failings.
Ofcom’s verdict comes during a period of serious volatility and financial strain within the energy sector.
Nearly half of the UK’s dual energy suppliers have left the market this year, with 19 ceasing trading since September.
Challenger firms have struggled to resolve 250 per cent increases in wholesale energy costs, without being able to increase charges to domestic consumers protected by Ofgem’s £1,277 per year price cap.
Cathryn Scott, director of enforcement and emerging issues at Ofgem said: ““While the unprecedented and unexpected rise in gas and electricity prices over recent months has put energy markets under severe strain, we expect suppliers to continue to comply with their licence obligations and treat people fairly, including by providing support to vulnerable consumers. Where we see poor behaviour, Ofgem will be ready to step in and take swift action.”
Utility Warehouse regrets that some customers “didn’t receive the full service they should have”, and revealed it always had payment processes in place in line with Ofgem’s rules for vulnerable customers even if it failed to always offer the necessary services.
The firm recognised more customers had pre-payment meters installed at their properties between 2013 and 2019 than necessary.
It has since expanded its payment solutions team, which focuses on customers and accounts having difficulties paying bills.
Utility Week said: “Ofgem has acknowledged that as of December 2019, our processes for dealing with these customers had improved and any potential gaps had been closed. We also took steps to go through the accounts of those customers who were impacted to individually check their circumstances, making sure they received the full service they were entitled to. We’re sorry that these customers were let down at the time.”