Small energy supplier Iresa has been banned by Ofgem from taking on new customers for up to three months until it resolves customer service issues.
The company, which is currently subject to a separate longer-term investigation by the regulator, has also been banned from increasing existing customers’ direct debits and asking customers for one-off payments during the period.
Ofgem has ordered Iresa to improve its customer service and has outlined several ways it expects the company to address the issue.
These include extending call centre hours and bringing down average call waiting 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.
The regulator said it will monitor Iresa’s response and has warned if the energy supplier fails to take these steps it could result in the revocation of its supplier licence.
Dermot Nolan, chief executive of Ofgem, said: “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.
“Iresa now needs to act quickly and put its house in order otherwise ultimately its licence could be revoked.”
Responding to Ofgem’s ban, a spokesperson for Iresa, said: “Iresa is actively working to fix the issues raised by Ofgem. We are confident that our customers will see a noticeable improvement in our customer service response times and we apologise to customers who we have let down in the past. We are committed to improving our quality of service to deliver a much better customer experience.”
Ofgem said it has decided to intervene because of the “substantial information” it has received which suggests Iresa’s customer service failings risk causing its customers “immediate harm”.
It has received details from Citizen’s Advice, the Ombudsman, and Ofgem’s own monitoring function.
Gillian Guy, chief executive at Citizens Advice, said: “Ofgem has made a very important intervention by confirming a provisional order on Iresa. We welcome this effort to prevent further problems for the supplier’s customers.
“As the watchdog for energy consumers, Citizens Advice formally referred Iresa to Ofgem last November for its consistently poor customer service. Iresa must now take steps to drastically improve its customer service and fix the problems experienced by its customers.
“But while this is a positive step, Ofgem also 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.”
Alex Neill, Which? managing director of Home Services, added: “Iresa has form for appalling customer service, this is the second time in a year the regulator has stopped them from gaining new customers and ordered improvements.
“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.”
“The “provisional order” is a temporary measure which allows the regulator to make a supplier stop or perform specific activities within a short timescale.
Ofgem said the move “does not imply that we have found conclusive evidence of a breach at this stage”.
Last month, Ofgem announced it had launched an investigation into the customer service processes at Iresa. It followed the news of the energy company hiking its prices, when several of its customers were faced with a sudden direct debit increase or a one-off payment of hundreds of pounds.
The provisional order is separate from the wider investigation into Iresa, which is ongoing.