AN energy supplier has been temporarily banned from taking on new customers after racking up debts of £3million.
Tomato had roughly 12,000 customers as of late 2024, but the energy regulator has stepped in to prevent it from acquiring any more.
said it had imposed a “sales ban” on the company because it has not maintained “sufficient levels of capital and liquidity”.
The energy supplier's website now says: “We are temporarily not accepting new registrations or providing quotes for new customers.
“Please check back for later updates.”
The regulator launched an investigation after it was told Tomato had unpaid of £3million.
Tomato could be facing legal action as a result.
Ofgem said if the energy company failed to pay its debts, it could end up passing the costs onto customers through higher .
Therefore it has issued a provisional order against the company banning it from taking on new customers, carrying out any marketing and providing or credit to customers.
Tomato admitted to Ofgem it had “cashflow challenges” that had caused it to make late payments but said action had been taken to prevent it from happening again.
It will now have to provide a report to the regulator proving it can protect customers and rectify the problem.
The firm said in a statement to Flying Eze: “We remain confident in our products and financial resilience and will be working closely with Ofgem to resolve any concerns.
“The company enjoyed rapid growth in recent months so we temporarily paused the acquisition of new customers so that we could focus on reviewing our processes and expanding our teams to provide a faster and smoother customer journey.
“This was already having a positive impact but there was more work to be done, so we plan to use this additional time to make further improvements and to settle any late payments.
“I would like to reassure our existing customers that they are unaffected by this announcement.
“We look forward to satisfying Ofgem's requirements and welcoming new customers again soon.”
The energy regulator makes sure that companies are held accountable and that will be protected when suppliers go bust.
Ofgem said in a statement: “We will take robust action if we see evidence that energy companies may be failing to comply with our rules, and have ordered Tomato Energy to stop signing up new customers until they can evidence that they are managing their financial obligations in line with those rules.”
Recently Ofgem had to step in when energy firm .
It left 80,000 households in the UK without a supplier, meaning the energy regulator had to make sure their supply was not disrupted.
The former Rebel Energy customers are now being moved over to .
Smaller energy firms are more likely to collapse, although they can often offer customers better deals than the Big Six companies.
Ofgem recently aimed at preventing more companies from going bust.
Under the new rules, energy firms must have a minimum financial buffer so they can better withstand market disruption.
The new rules were imposed after 30 companies went bust in less than a year at the height of the energy crisis.
They included , , Together Energy and Orbit.
The collapses left more than two million without a supplier.
