The regulator handed Iresa, which has fewer than 250,000 customers, a temporary ban in March.
But improvements in handling complaints and vulnerable customers have not been good enough. Iresa, of Nottingham, was also rated worst for service by Citizens Advice.
Its chief Gillian Guy said it was too easy to set up in business as an energy supplier and Ofgem’s review “must make it easier to stop unprepared suppliers from entering the market and take poorly performing companies out faster”.
“Iresa continues to let its customers down by failing to provide a level of customer service its customers deserve,” said Ofgem chief Dermot Nolan.
“Although it has made some improvements since we issued the provisional order in March, the supplier has been unable to meet all the requirements we set it three months ago to get its house in order.
“Ofgem will step in to protect consumers if any supplier fails to provide a satisfactory level of customer service and will take firm action against those flouting the rules, which could include a supplier’s licence being taken away.”
Iresa said it was disappointed with Ofgem’s decision after tripling staff in customer service.