Green Star Energy has shelled out nearly £680,000 to help compensate customers for mis-selling and failing to provide annual statements.
Industry watchdog Ofgem said the company breached supply licence rules, after failing to make clear that it had hired a third party to market and sell its tariffs.
As a result, it was deemed to have misled potential customers.
Customers who arrived at the Utility Discount website – which Green Star Energy had used as a sales channel – via a particular online sales advert were only offered a Green Star Energy tariff if it was cheaper than their existing bill.
Ofgem said that between January 25 and May 25 this year, Green Star Energy failed to make sure that Utility Discount clearly informed potential customers that it was acting as Green Star’s representative, leaving consumers unable to make an informed choice.
“As a consequence some customers did not realise that cheaper deals were available elsewhere,” Ofgem said.
“Only customers who arrived via the online advertisement whose current tariff was cheaper than any Green Star Energy tariff were shown a wide view of available tariffs.”
While suppliers are allowed to use third parties for marketing and sales, it has to make sure consumers are fully aware that websites are operating on behalf of the energy firm rather than passing as an independent comparison site.
Ofgem said Green Star Energy has since taken action to make sure it was compliant with those rules.
It also committed to paying £361,415 in compensation to customers it gained through Utility Discount, and allowed them to switch to another supplier without being charged exit fees.
Green Star Energy agreed to pay another £151,376 to the consumer redress scheme for mis-selling to customers.
The firm separately self-reported to Ofgem that it failed to issue an annual statement to some customers between August 2014 and November 2017.
Green Star Energy poured a further £166,492 to the consumer redress fund as a result.
Suppliers are required to issue statements to each customer at least once a year to help them understand their energy consumption, estimated costs and remind them that money could be saved by switching.
It is now issuing annual statements to the bulk of its customers and has put together an “action plan” to do so for its remaining clients.
“Consumers may be able to save hundreds of pounds by switching supplier. Ofgem is committed to making it easier for people to find the best deal for them, and to taking firm action if suppliers’ behaviour falls short in this respect,” Ofgem said in its release.
The industry watchdog said it is now closing the case without taking further enforcement action, given the steps Green Star Energy has since taken to address its failings and compensate customers.