The customer service processes of small energy supplier Iresa are now under investigation by Ofgem.

This follows news of a price hike from Iresa that broke two weeks ago, when it was reported  a number of Iresa customers are facing a sudden direct debit increase or a one-off payment of hundreds of pounds – and in some cases both. If applicable, the direct debit and one-off payment were both taken out of customer’s accounts at the end of January, with very little warning.

Customers of the small supplier took to online forums to express their concerns, and said they were struggling to get through to the company on the phone.

This is a particular worry to consumers as both GB Energy Supply and Future Energy both hiked their direct debits shortly before closure – there is concern this may be a warning sign that another small supplier is in trouble.

Ofgem said the investigation would examine whether Iresa broke rules relating to “customer information and customer contact”.

There is mounting pressure on the UK energy regulator to toughen the licensing rules for new suppliers, as concerns have been growing about the long-term viability of some of the smaller operators after a number stopped trading earlier this year. Ofgem has said it is considering the timing of a wider review of its approach to awarding supply licences.

Concerns about a high level of complaints against Iresa were raised with Ofgem through Citizens Advice and the regulator’s consumer affairs team, the regulator said.

Gillian Guy, chief executive of Citizens Advice, said today’s (16 February) announcement was “extremely welcome”.

Citizens Advice reported Iresa to Ofgem in November 2017, following a number of concerns related to billing problems, long phone queues and inappropriately blocking customers from switching.

Guy added: “according to our complaints handling data, Iresa is one of the poorest performing energy companies.

“New entrants to the market should face greater scrutiny. It’s currently too easy for new firms to set themselves up as energy suppliers, often before they are able to provide good quality customer service. Ultimately it is energy customers who pay the price when firms are not up to scratch.”

Ofgem said the investigation would examine whether Iresa treated customers fairly in their call handling and complaints processes, gave indebted customers sufficient notice that they were taking a debt repayment out of their account, or established with these customers their ability to pay the debt.

It added the opening of the investigation “does not imply that we have made any findings about non-compliance by Iresa.”

At the time of going to press Iresa was unavailable for comment.

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