A Warwick-based independent energy provider has been told to change its policies relating to hard-up and vulnerable customers after an investigation by industry regulator Ofgem.

The energy watchdog has launched enforcement action against First Utility, a gas and electricity supplier with 50,000 customers across the UK, because it was not offering customers in payment difficulty the use of a pre-payment meter, which helps consumers manage their debts.

The regulator also said First Utility, which launched in 2008, had not drawn up fit-for-purpose policies for dealing with elderly, disabled or chronically sick customers.

First Utility, which employs around 150 people, said it was yet to disconnect a residential customer and had amended its policies for dealing with vulnerable customers.

In a letter explaining the enforcement action, Sarah Harrison, senior partner for sustainable development at Ofgem, said: "First Utility has provided us with its policies and procedures to date. However, Ofgem has reviewed these and found them wanting.

"First Utility does not appear to carry out consistent checks in its policies to determine whether there is a person who is of pensionable age, disabled or chronically sick who is not a customer but may live with a customer. Ofgem believes that, in order to meet obligations, it is implicit that all suppliers have proper policies in place to identify these vulnerable customers."

Ofgem said it had made a provisional order against First Utility because of the firm's "continuing non-compliance". The order requires the firm to provide evidence it has resolved the breaches by March 7.

Mark Daeche, chief executive at First Utility, said: "First Utility has for the last 18 months implemented a strict policy of non-disconnection for its residential customers.

"We understand and support Ofgem's requirement for us to offer to financially distressed customers the opportunity to take a pre-payment solution and as such we take this order very seriously.

"During this process we have made every effort to implement improved procedures across our business and we will continue to do so to ensure that the required standards are achieved by the end of February 2011."