Independent energy supplier Iresa may be forced to close if it fails to fix issues raised by Ofgem. Katey Pigden investigates.

Independent supplier Iresa may be forced to shut up shop if it fails to resolve customer service issues. The small energy supplier is not allowed to take on new customers for up to three months and has been given a firm warning to put its “house in order”, by the regulator.

Ofgem’s provisional order also restricts Iresa from increasing existing customers’ direct debits and asking customers for one-off payments, something the company has come under fire for in recent months.

The energy supplier, which is already subject to a separate ongoing longer-term investigation by Ofgem, has been pulled up for poor customer service practices including keeping customers waiting on the phone for too long and not responding to emails in a timely fashion. But now it must act quickly or risk having its licence revoked.

Iresa says it is actively working to fix the issues raised by Ofgem and is confident its customers will see a “noticeable improvement” in its customer service response times.

The company apologises to customers it has let down in the past and says it is committed to improving its quality of service to “deliver a much better customer experience”.

Ofgem’s intervention comes on the back of “substantial information” from Citizens Advice, the Energy Ombudsman and the regulator’s own monitoring function, which suggests Iresa’s customer service failings risk causing its customers “immediate harm”.

Gillian Guy, chief executive of Citizens Advice says the watchdog for energy consumers welcomes the intervention to prevent further problems for customers but suggests Ofgem needs to go further. “The regulator should tighten up its licensing regime, so they can prevent poorly prepared suppliers from entering the market in the first place,” she says.

Citizens Advice formally referred Iresa to Ofgem last November for its “consistently poor” customer service. Guy adds: “Iresa must now take steps to drastically improve its customer service and fix the problems experienced by its customers.”

Dermot Nolan, chief executive of Ofgem, says: “This order sends out a very clear message to suppliers that where they fail their customers on service, Ofgem will step in and take strong action.

“It’s crucial that all suppliers provide customers with good service, including acting quickly and effectively to sort things out wherever problems occur.”

He adds: “Iresa now needs to act quickly and put its house in order otherwise ultimately its licence could be revoked.”

The Energy Ombudsman highlights it has received a “growing number” of complaints about Iresa over the past 12 months and says it recognises the need for Ofgem to act.

Unexpected price-hikes

Lewis Shand Smith, chief ombudsman at Ombudsman Services, says: “As with any supplier we see struggling to manage complaints, we have actively tried to help Iresa improve its complaints handling processes, but Ofgem had to take action to address the issues being experienced by customers across the country.

“We will continue to support Iresa with its efforts to improve customer service and reduce consumer detriment throughout its three-month trading ban, but anyone who has experienced an issue should try to be patient. If you have a complaint with Iresa that has not been resolved after eight weeks, you can bring your complaint to us and we’ll review your case for free.”

Meanwhile, consumer champion Which? argues “Iresa has form for appalling customer service” stressing “this is the second time in a year the regulator has stopped them from gaining new customers and ordered improvements”.

Alex Neill, Which? managing director of home services, says: “The company now must ensure it changes for the long term otherwise the regulator will need to go further to protect consumers. Energy customers shouldn’t have to tolerate shoddy service, unexpected price-hikes, or failure to resolve complaints.”

Ofgem’s provisional order is a temporary measure which allows the regulator to make a supplier stop or perform specific activities within a short timescale. It says the move “does not imply [it has] found conclusive evidence of a breach at this stage”.

But the news has added to the ongoing debate about how well the energy market is working, with some questioning if Iresa will be the next small supplier out the door, following in the footsteps of GB Energy, Brighter World Energy and Future Energy.

Doug Stewart, Green Energy UK’s chief executive, says: “Iresa is one of a number of small suppliers to succumb to an energy market which is not working. How many more energy companies have to go bust using Ofgem’s recently introduced ‘safety net’ before there is some sensible stress testing of energy suppliers? Ultimately it is the consumer that pays when an energy company goes bust, although the energy companies pay the upfront costs of creating a fund these costs eventually get passed onto the consumer. We need to be looking carefully at the cause of these failures, before we have another Carillion on our hands.”

Acknowledging the energy industry has been “the butt of criticism” for some time and how the big six are often under pressure to change the way they operate, he suggests: “So far the only ones going bust are the new entrants offering unsustainable prices and using customer money for operating capital. 

“Let’s be careful what we wish for; there might not be anyone prepared to take in the customers of failing suppliers without the big six.”

Customers nowadays demand great customer service, and smaller energy companies need to ensure they have a point of difference in an increasingly turbulent world. If they fall short, they may be left by the wayside.

 

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