Energy company pays £1.5m redress after overcharging customers

16th December 2019

iSupply Energy is to pay out £1.5 million in redress after the supplier overcharged around 4,400 of its customers on default tariffs and failed to alert the regulator (Ofgem) and put things right quickly.

The price cap for 11 million customers on default tariffs came into force on 1st January 2019 with all energy suppliers 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.

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.

iSupply Energy 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 says that it 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.

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.”

Gillian Guy, Chief Executive of Citizens Advice, said “We’re pleased to see that iSupply has not only refunded the customers it overcharged, but is also paying this voluntary amount into Ofgem’s redress fund. iSupply has promised to improve the way it’s run to make sure this cannot happen again. Ofgem, as the regulator, must make sure that they keep to their word.”

“This is the second time in a year that iSupply has failed to charge customers correctly. It underlines why Ofgem’s proposed stricter regulations for new and existing suppliers should be put into effect as soon as possible.”

Peter Earl, Head of Energy at comparethemarket.com, said: “The actions of iSupply do little to restore faith in an energy market plagued with problems, including an excess of supplier collapses and a price cap not fit for purpose. The price cap was introduced to protect customers from overpaying on their energy costs – yet the difference between the cheapest tariff on the market and the average standard variable rate tariff is a whopping £314. It adds insult to injury that thousands of iSupply customers were being overcharged on top of paying full whack for their energy tariff. Whilst we applaud Ofgem for taking action against this supplier for misconduct, the issues of consumers being confused by the price cap and the complexity of their energy bill will rumble on in 2020. The price cap should be seen by consumers as the absolute ceiling of what they should be paying for energy. Switching supplier regularly is one of the most effective ways to reduce energy costs and avoid paying over the odds.”

Adam French, Which? Consumer Rights Expert, said “It is right iSupply has agreed to pay this hefty sum into Ofgem’s voluntary redress fund, as it failed to accurately bill thousands of customers and overcharged some of those protected by the price cap.”

“iSupply finished near the bottom of our 2019 satisfaction survey, so customers who are unhappy should switch to a provider that can offer better customer service. We’d urge anyone unsatisfied with their supplier to shop around for the best deals on the market and to switch now – you could save hundreds of pounds a year and potentially receive better customer service.”