OFGEM – the UK regulator – has imposed a £560,000 fine on an independent energy supply company which held thousands of its customers ‘ransom’ by refusing to let them move to another provider.
Over a prolonged period, Utilita – which is committed to keeping its prices lower than the ‘Big Six’ – wrongly blocked 40,000 customers from switching to other suppliers.
Consequently, Utilita has been ordered to pay £450,000 to StepChange and the regulator has also ordered the company to refund £110,000 to customers who lost out financially after being stopped from switching.
Over a five year period to May 2015, Utilita wrongly stopped customers from switching away. Customers were incorrectly blocked by the supplier in a variety of ways, including automatically blocking those on fixed-term contracts.
Utilita also failed to write to customers to explain why their switch had been blocked and what action they could take to resolve any issues.
Anthony Pygram, senior partner with responsibility for enforcement at OFGEM, said: “The ability to switch suppliers is important for customers and fundamental to a well-functioning energy market.
“Utilita’s prolonged failure to allow many customers to switch was unacceptable.
“Utilita acknowledges its failure and is rightly looking to refund customers left out of pocket.”
StepChange Debt Charity is dedicated to providing free and effective debt advice and practical solutions, to help those struggling with the stress and worry of energy and other problem debts.
StepChange is the UK’s largest debt charity, with over 1,200 staff and with offices in England, Scotland, Wales and Northern Ireland. Their service is based on a best advice model and draws on more than 20 years of experience.
The redress payments will be used to fund various projects that will improve advice and services available for often vulnerable consumers who are experiencing energy-related debt and other debt problems.
A spokesman for Utilita said: “We would like to apologise unreservedly to those customers whom we wrongly prevented from switching supplier.
“Most customers impacted were only affected for a part of the period. Of those customers affected, under 10% were left out of pocket. We will be contacting those customers as quickly as we can to rectify this.
“Our customers are vitally important to us and we have taken quick and decisive action to update and improve our switching procedures. None of the issues investigated remain a problem and all our transfer processes are now compliant.”
Meanwhile the same day that OFGEM announced its punishment for Utilita Energy, the Hampshire-based company announced a sponsorship deal with the Scottish premier football league as the official Presenting Partner of the Scottish League Cup for the remainder of the 2015-16 season.
Bill Bullen, Chief Executive, said Utilita will also shortly announce a number of additional initiatives in Scotland to tie in with sponsorship – including a charity partner.