Small energy supplier Iresa has failed to meet targets to improve customer service and faces an extension on the ban, which prevents it taking on new customers.
Ofgem began a three-month investigation into the company, just over two months ago and banned Iresa from taking on new customers, increasing direct debits and asking for one-off payments.
The regulator ordered Iresa to improve customer service and outlined several ways it expected the company to address the issue.
These included extending call centre hours and bringing down average call wait times to below five minutes; responding to customer emails within five working days; clearing a backlog of consumer emails; logging and recording customer dissatisfaction and identifying vulnerable customers, including offering to put them on a priority services register.
Iresa has “not fully met” the targets set out by Ofgem and the regulator has issued a proposal to extend the ban until the targets are met.
The supplier now has until 27 June to make its representations in response to Ofgem’s initial findings.
Ofgem will then decide whether to take further action, which could result in the revocation of the company’s supplier licence as the regulator’s chief executive Dermot Nolan warned in March.
An Ofgem spokesperson, said: “Iresa has not met the customer service targets we set it two months ago, and continues to let consumers down on these aspects of service.
“So, we have issued proposals to extend our ban on the supplier from taking on new customers, increasing direct debits, and asking for one-off payments until they meet these targets.”
Ofgem decided to intervene because of the “substantial information” it received which suggested Iresa’s customer service failings risk causing its customers “immediate harm”.
Consumer advocates have welcomed Ofgem’s proposal to extend the ban.
Victoria MacGregor, director of energy at Citizens Advice, said: “We referred Iresa to Ofgem for a catalogue of problems related to billing problems, long phone queues and inappropriately blocking customers from switching. It seems that little has improved for customers, so it would only be right for Ofgem to continue enforcement action.
“The ongoing issues with Iresa further highlight the wider problem that it is too easy for new suppliers to enter the market before they have systems and processes in place to deliver good customer service.”
Alex Neill, Which? managing director of home services, added: “Until Iresa gets its house in order, it’s only right that the regulator is extending this ban on taking on new customers. The provider now must ensure it complies with the regulator and changes for the long term.
“Energy customers shouldn’t have to tolerate shoddy service, unexpected price-hikes, or failure to resolve complaints, anyone not happy with the service they are getting should look to switch away.”
A spokesperson from Iresa, said: “We are extremely disappointed by Ofgem’s decision to give notice of their intention to confirm the provisional order.
“Iresa remains committed to providing the best quality service to its customers at low prices. We have been working closely with Ofgem and will continue to do so to ensure any concerns they have are addressed and resolved as a matter of urgency. In the meantime, we apologise to our customers for any inconvenience this situation has caused.”
Iresa is also subject to a separate longer-term investigation by the regulator, launched in February.
It followed the news of a sudden price hike imposed by the energy company, when several of its customers were faced with a direct debit increase or a one-off payment of hundreds of pounds.
Ofgem has put four energy suppliers under the spotlight this week. The regulator alleged Economy Energy and E (Gas and Electricity) breached competition law, along with consultancy firm Dyball Associates.
It has also launched an investigation into the way Utility Warehouse manages its customers who are in debt.