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Ovo Energy has agreed to pay out more than £10 million after regulator Ofgem found vulnerable customers were left at a “risk of harm” due to the supplier’s poor monitoring of households on prepayment meters.

Ofgem said Ovo’s inadequate oversight of prepayment meter customers included those on the priority services register, meaning they were vulnerable customers.

The watchdog said this led to breaches of rules “designed to protect customers in vulnerable situations – exposing consumers to a clear risk of harm”.

Ovo has agreed to a settlement including a £7 million payment to Ofgem’s voluntary redress fund and a £3.4 million package of credit and debt relief for some of its most vulnerable customers, which Ofgem said was in lieu of compensation.

It comes just weeks after German rival E.On agreed to buy Ovo in a deal which will create Britain’s largest electricity supplier.

Cathryn Scott, director of market oversight and enforcement for Ofgem, said: “It is clear that Ovo fell short in its support of vulnerable prepayment meter customers and it’s right that they’ve taken action to improve their processes.

“As a result of our investigation, vulnerable customers will receive debt write-off or credit payments alongside a payment into our voluntary redress fund.

“Prepayment meters are a positive choice for many customers, helping them stay in control of their energy use and reporting high levels of satisfaction – but it’s not suitable for everyone and strong monitoring must be in place to protect vulnerable consumers.”

Ovo is also paying out another £1.1 million to customers in the Scottish Highlands and Islands after Ofgem said Ovo failed to offer adequate engineer support to rural households for more than two years from January 2022 to April 2024.

It follows after Ofgem in January ordered Ovo to pay £2.77 million in compensation after nearly 12,000 vulnerable customers suffered lengthy delays in getting their warm home discount support.

Of those affected, 7,726 were on the priority services register, meaning they were vulnerable customers, and 4,066 of these were classed as medically vulnerable.

The latest payout comes amid a crackdown by the regulator on the prepayment meter market.

British Gas last month agreed to a £20 million payout and to compensate customers who had a prepayment meter installed without their permission.

Ofgem stressed the probe into Ovo was opened due to concerns over its processes and treatment of prepayment meter customers, rather than the forced installation of meters.

The regulator said: “Ofgem’s investigation found that Ovo failed consistently to monitor and accurately record customer interactions, with evidence showing that key checks and safeguards were not always carried out.

“These gaps in oversight risked missing signs of vulnerability, leaving some customers exposed to harm.

“The regulator also identified issues with staff training materials, which were at times unclear, inconsistent and contained conflicting guidance.”

Ovo said it has since strengthened its policies and systems, including a new policy to identify and support vulnerable customers.

An Ovo spokesperson said: “We accept that some of our historic processes fell short of expected standards and we are sorry for that.

“Keeping our customers safe and supported is hugely important to us, and we recognise there were areas where we needed to do better.”