Small energy provider iSupply have been handed a fine of £1.5 million by energy regulator Ofgem, for overcharging customers and hiding it from the regulatory body.
The firm has agreed to pay into Ofgem’s voluntary redress fund – which is used to encourage innovation – and distribute donations to various charities.
A whistleblower was instrumental in alerting Ofgem to this overcharging back in August, stating that iSupply Energy overcharged about 4,400 customers, given that a new price cap had been implemented at that time.
The energy price cap took effect in January, which meant that suppliers were prohibited from charging customers above the default tariff of £1,137 per year for household use.
The preliminary cap took place in January and lasted until March, after which it was raised once more to £1,254.
However, it was revealed that iSupply didn’t abide by the initial cap, and charged £36,270 more than allowed. It then violated the increased cap, overcharging 25 customers by £53.
In March of 2018, iSupply announced that it was increasing its iVariable tariff, the standard deal applied automatically after a fixed contract ends. The firm raised the value to £1,090 per year from £1,040. Around 16,500 customers were understood to have been affected by the increase.
iSupply Managing Director Rob Gildert mentioned in a statement that only 9% of their customer base had been affected, which they claim is fewer than those affected by price hikes under the Big Six.
Fast forward to January when the starting price cap was implemented, which iSupply were found to have breached by overcharging 4,400 of its customers.
During the Ofgem investigation, it was revealed that the company’s compliance processes and governance lacked the effectiveness needed to prevent the issue from happening. Ofgem believes that the energy firm’s senior employees knew of the breach, but did not report it to the regulating body. It took a whistleblower for Ofgem to find out instead.
The regulator also noted the firm’s failure to correct tariffs or issue refunds to customers on time.
iSupply Co-Chief Executive Monica Collings expressed disappointment that their company fell short in providing high-quality service to its customers during that time.
The £1.5 million fine will be paid into Ofgem’s voluntary redress fund, and the energy provider has since issued refunds and compensation to the customers that were affected.
The price cap has since decreased in October and is set to be reviewed again in April 2020.
Ofgem criticised iSupply – and its senior staff I particular – for ignoring the breaches back in January and failing to report the matter or act on it promptly.
The regulating body was disappointed by the fact that it took a whistleblower to inform them about the matter in August, several months after the offences occurred.
Any non-compliance with Ofgem’s default cap is frowned upon, but in general, companies that self-report any failing on their part are treated more favourably, compared to those that don’t.
iSupply has earned the ire of the regulator because its compliance processes were discovered to be lacking. This was only exacerbated by the overcharging issue during the initial price cap breach.
Ofgem notes that iSupply has taken steps to improve processes. The regulator plans to invest in the firm to ensure that similar issues can’t happen in the future.
The regulator is examining consultation responses for existing energy suppliers regarding the new set of rules, to keep their customer service and financial health in check as they expand.
iSupply is a small energy supplier that offers 100% renewable electricity to its customers under every energy plan they offer. It also has a 100% carbon offset feature on its natural gas for fixed deal tariffs. The company has been headquartered in Bournemouth since 2012.
In the third quarter of 2019, iSupply has received 73 complaints from 10,000 clients, which spiked to 95 around the time the issue occurred.
iSupply was acquired by Vattenfall – a Swedish energy firm – back in 2017, who are operating the firm as a subsidiary.
The latest estimate of iSupply customers dates from the time the firm was acquired by Vattenfall, when it reported having some 120,000 customers.