Energy provider fined £1.5m for customer debt issue as another ceases trading
Utility Warehouse has agreed to pay £1.5 million after the energy provider admitted that it failed to consistently treat customers fairly, which resulted in some customers being disadvantaged and facing increased financial hardship.
Energy regulator Ofgem was made aware of the failings following an audit report in 2018. A formal investigation was then opened which found that Utility Warehouse’s failings took place between 2013 and 2019.
The supplier did not consistently offer to put domestic customers struggling to pay their energy bills on debt repayment plans, to allow payments to be taken direct from customers’ benefits or to take into account customers’ ability to pay when calculating regular instalments as required.
Customers were not consistently offered the option of paying back charges via the voluntary installation of a pre-payment meter or offered energy efficiency advice on how to reduce their bills. In some cases, this led to the unnecessary installation of pre-payment meters under warrant.
During the course of the investigation, Utility Warehouse also raised the fact that it submitted some inaccurate Social Obligation Reporting (SOR) data to Ofgem between 2013-2019. This data allows Ofgem to review suppliers’ performance regarding their social obligations and compliance with licence requirements, challenge poor performance and inform policy decisions.
Ofgem has decided to close the investigation through alternative action after considering that Utility Warehouse has accepted its failings and put in place measures to prevent this from happening again. It has offered to pay £1.5 million into the voluntary redress fund, which supports vulnerable customers and innovation within the energy sector.
Cathryn Scott, director of enforcement and emerging issues at Ofgem, said: “Energy suppliers are required to look after their customers, especially those in vulnerable situations. Between 2013-2019, Utility Warehouse failed to take the necessary steps to treat some customers in payment difficulty fairly, depriving them of the opportunity to manage their energy debt and ongoing energy costs.
“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.”
Ofgem has also appointed five suppliers to take over the energy supply for customers of six companies which have recently exited the market.
The suppliers will take on a total of 70,600 domestic and non-domestic customers.
Pozitive Energy will take on customers of CNG Energy and CNG Electricity, which supply 41,000 non-domestic customers and ceased trading last week. SmartestEnergy Business Limited will take on customers of MA Energy, which supplies 300 non-domestic customers, while Utilita will take on customers of Omni Energy, which supplies 6,000 domestic pre-payment customers.
British Gas will take on the 5,900 domestic customers of Bluegreen Energy, along with a small number of non-domestic customers, and Zebra Power, which supplies 14,800 domestic customers.
Finally, Yü Energy will take on customers of Ampower, which supplies 600 domestic and 2000 non-domestic customers.
Neil Lawrence, Ofgem’s director of retail, said: “I am pleased to announce we have appointed new suppliers for these customers. We understand that this news may be unsettling for customers, however they do not need to worry. Their energy supply will continue as normal, and domestic customer credit balances as well as some non-domestic credit balances, will be honoured.”