Ofgem has confirmed it has closed its investigation into Iresa after the troubled energy supplier ceased trading towards the end of last month.
The regulator opened an investigation into Iresa in February to determine whether the company breached licence conditions and consumer complaints handling standards. These related to treating customers fairly, complaints and call handling, customer switching, providing refunds and consideration of customers’ ability to pay when in debt.
In an update into the status of the investigation, Ofgem said Iresa ceased trading on 31 July, although notification of the company’s closure was first announced by the regulator on 27 July.
Iresa’s licences to supply gas and electricity were revoked as of 1 August, Ofgem said. The supplier’s customers have been transferred to Octopus Energy under the supplier of last resort process.
Ofgem said Octopus will honour outstanding credit balances, including money owed to both current and former Iresa customers.
However, the cost of protecting customers’ credit balances will be partly met by Octopus Energy, and the rest will be covered by the safety net put in place by Ofgem. This is funded by a levy spread across all energy suppliers.
Citizens Advice named Iresa the worst energy company for customer service as the firm received a record number of complaints between January and March 2018. It ranked bottom in the energy star rating table with a score of 0.35 stars out of five for its customer service.
Iresa had been struggling for several months and was banned from taking on new customers since March.
Matthew Vickers, chief executive and chief ombudsman designate at Ombudsman Services said a failure to adequately deal with complaints led to the demise of Iresa.
A statement on Iresa’s website, which is no longer operational, said: “Matthew J Cowlishaw and Daniel J M Smith of Deloitte LLP were appointed joint administrators of Iresa Limited on 1 August 2018.
“The affairs, business and property of the company are managed by the joint administrators.”
Octopus will contact all Iresa’s customers before 14 August and move them onto its cheapest tariff. Switches to Octopus will be completed around 21 August and customers will be free to switch to other suppliers from then without being charged exit fees.
Ofgem’s regulation of small suppliers has come under scrutiny following problems at Iresa. Critics claim it is too easy for new suppliers to enter the market without the correct processes in place.
On Monday (6 August) the GMB union reignited calls for “stricter licence rules” being needed for independent energy companies.
It said the collapse of Iresa and National Gas and Power was a “clear signal” for Ofgem to act.
Justin Bowden, GMB national secretary, added: “The likelihood of further high profile collapses is almost inevitable and the position will only get worse when a cap comes in, particularly if it is poorly structured and set at the wrong level.”
The regulator is reviewing its approach to supplier licensing and could toughen rules for entry to the energy market.