Watchdog bans energy company from taking on new customers

Energy supplier Economy Energy has been banned from taking on new customers until “resolves its customer service issues”.

The provisional order against the Coventry gas and electricity supplier to nearly 250,000 homes also bans it from requesting one-off payments and increasing direct debits.

Ofgem said the ban will initially remain in place for up to three months in order for Economy Energy to take steps to improve and expand its customer contact procedures via email and webchat, address its billing and payment failures, and issue customer refunds in a timely manner.

If Economy Energy fails to make improvements within three months, Ofgem said it can confirm the provisional order to extend the ban.

Ultimately, if the supplier fails to improve Ofgem can take steps to revoke its licence.

Ofgem said it has taken action due to the decline in the standards of Economy Energy’s customer service, complaints handling processes and standards, and billing and payment procedures.

Anthony Pygram, director of conduct and enforcement, said: “Ofgem is taking action to protect customers from suffering more harm from the unacceptable level of customer service provided by Economy Energy. We expect the supplier to take immediate action to rectify its failings or face having its ban extended.

“All suppliers are required to treat their customers fairly. Where they do not, Ofgem will take the necessary steps to ensure suppliers change their behaviour and to prevent further harm to customers.”

The news comes just weeks after reports that Economy Energy was seeking a rescue fundraising to avoid becoming the latest in a string of companies in the sector to collapse last year.

Economy Energy is thought to have appointed KPMG to undertake a review of its “strategic options”, which are said to include a capital injection or a sale of the business.

The company’s hunt for funding comes following a string of collapses of smaller suppliers, such as Spark Energy, which saw its 290,000 customer accounts acquired by rival Ovo Energy in late November. Others to have ceased trading include Extra Energy, Future Energy and Iresa.

Economy Energy was revealed in December to owe regulator Ofgem £15.5m, more than any other energy firm.

Ofgem said that 15 suppliers missed a final deadline for green taxes, totalling £58.6m.

Electricity providers who do not get enough of their energy from renewables are required to pay into the fund, which supports major green energy projects across the UK.