ISUPPLY energy Ltd is to pay £1.5 million after the supplier overcharged around 4,400 of its customers on default tariffs, according to Ofgem.
The price cap for 11 million customers on default tariffs came into force on 1 January 2019. All suppliers are required to charge their default tariff customers at or below the level of the cap to ensure they pay a fair amount for their energy.
Anthony Pygram, director of conduct and enforcement at Ofgem, said: “If a licensee breaches the rules, it quickly needs to tell Ofgem and put things right for its consumers. However, iSupply has admitted it failed to do so in this instance.
“Suppliers must charge their default tariff customers at or below the level of the price cap. Senior staff at iSupply knew that they were overcharging default tariff customers yet failed to refund them and report the issue to Ofgem in a timely manner.
“The action we have taken against iSupply sends a strong message that all suppliers must treat their customers fairly and quickly address known harm so that customers are protected, or face the consequences.”
For the first price cap period (January to March 2019), iSupply overcharged around 4,400 customers £36,270 in total.
For the second price cap period (April to September 2019), 25 customers were collectively overcharged by £53.
Senior employees at iSupply were aware of the breach in January 2019 but did not report the issue to Ofgem.
A whistleblower came forward to Ofgem in August 2019 with credible information, supporting Ofgem’s own monitoring and compliance activities on the issue.
Ofgem has found that iSupply had insufficient governance and processes in place to prevent and swiftly address such non-compliance.
iSupply did not correct customers’ tariffs or issue refunds to those affected in a timely manner.
iSupply has since refunded customers it overcharged and has agreed to pay £1.5 million into Ofgem’s voluntary redress fund for its failings.
The supplier has also confirmed it has improved its governance and processes and will continue to invest in process and systems change to ensure that these or similar issues do not reoccur.
Ofgem has decided not to take formal enforcement action after considering the steps iSupply has taken to address its failings and the redress it has agreed to pay.
Ofgem closely monitors all suppliers’ conduct, including their approach to the implementation of the cap, and will continue to hold suppliers to account if they do not meet their obligations.
iSupply commented on the Ofgem action with the following statement:
“We’ve recently been engaging with Ofgem regarding compliance issues over which it had significant concerns. With respect to its price cap, we’ve not always fulfilled our obligations to customers as we should have.
“Due to insufficient governance and processes, between January and March 2019 we overcharged around 4,400 customers on the default tariff cap for the first Charge Restriction Period, with a total detriment of £36,270.
“We also overcharged 25 customers on the default tariff cap within the second Charge Restriction Period, April to September 2019, with a total detriment of £53.
“We corrected all overcharges in October and November 2019.
“Senior employees within the company were aware of issues that led to the breach in January 2019 and did not self-report to the regulator in a timely manner.
“We did not treat customers fairly, as we didn’t correct tariffs or refund what we had overcharged promptly. This put us in breach of SLC28AD and SLC0.
“iSupplyEnergy always endeavours to act with our customers’ best interests in mind. Unfortunately, with regards to the price cap, we have fallen short.
“We recognise the seriousness of these breaches and have agreed to pay £1,500,000 into the Energy Industry Voluntary Redress Scheme. As well as reimbursing affected customers the amount we overcharged, we apologised and paid each customer a further £5 per account as a goodwill gesture.
“Since we discovered some customers were on an incorrect tariff, we’ve worked extremely hard to transform our compliance capabilities and make sure the same or similar things can never happen again.
“We’ve strengthened our compliance capability, growing its skills-base, industry knowledge and experience, as well as giving the team the authority and tools it needs to be effective.
“We’ve also invested in resource in other key areas of the business and strengthened our leadership team to provide additional support and oversight. This further investment reflects our broader commitment to serving customers and has delivered results that can be seen in improvements to our Citizens Advice ranking and Trustpilot score during the year.
“We’re grateful to Ofgem for the way they’ve engaged with us. We have learnt from this process and are now better placed to consistently service all our customers in the right way.”