The energy supplier was found to have overcharged around 4,400 customers on default tariffs who should have been protected by the energy price cap.

The price cap, which was introduced by the energy regulator, Ofgem, on 1 January 2019, is the maximum price suppliers can charge a typical dual fuel customer on a standard variable tariff.

Around 4,400 customers were overcharged £36,270 between January and March 2019, and a further 25 customers were overcharged by £53 in total between April and September this year.

Senior staff were aware of the overcharge but failed to report the issue to Ofgem. But in August, a whistleblower came forward.

As part of the investigation, Ofgem said the firm had “insufficient governance and processes in place to prevent and swiftly address such non-compliance”.

It also failed to correct customer tariffs or issue refunds quickly to those affected.

iSupply has now refunded customers and will need to pay £1.5m into Ofgem’s voluntary refund scheme. It said it has improved its processes and will continue to invest in systems to ensure similar issues don’t happen again.

Anthony Pygram, director of conduct and enforcement at Ofgem, said: “If a licensee breaches the rules, it quickly needs to tell Ofgem and put things right for its consumers. However, iSupply has admitted it failed to do so in this instance.

“The action we have taken against iSupply sends a strong message that all suppliers must treat their customers fairly and quickly address known harm so that customers are protected, or face the consequences.”

Richard Neudegg, head of regulation at uSwitch.com, said: “iSupply has badly let down consumers. Mistakes can happen, but they overcharged their own customers and did nothing about it until the regulator stepped in. The only reason this came to light was because of a whistleblower.

“People comparing energy tariffs will now be looking at iSupply and wondering whether they will be treated fairly.”

iSupply said: “We didn’t get everything right when we made tariff changes to meet Ofgem’s price cap. We’ve apologised to all affected customers and compensated any who were negatively impacted. Over the year, we’ve made big improvements to how we operate. Our Trustpilot rating is now ‘Great’ our Citizens Advice ranking has increased and we’ve won two awards for business improvement. We don’t expect these issues to occur again.”