Energy giant British Gas has been fined £2.65 million by the regulator Ofgem for a variety of misdeeds and illegal practices.
Ofgem’s investigation into British Gas, which was opened in June 2017, resulted in the firm being required to pay out over £500,000 in compensation to customers overcharged on tariffs, nearly £250,000 to those affected by wrongly charged exit fees, and over £1 million in fines to Ofgem.
Among the issues cited by Ofgem were wrongly charging customers exit fees, automatically switching customers onto more expensive standard tariffs, and wrongly informing others about the possibility of exit fees. British Gas acknowledged the faults, blaming system errors and saying that those overcharged were “promptly refunded as soon as we identified the issue and were paid an additional goodwill gesture.”
Ofgem’s report found that the issue affected 94,211 customers who had attempted to switch providers away from British Gas, and either illegally charged them a certain fee for this or threatened to do so. The overall amount paid by these customers amounted to £782,450, all of which has been refunded by the Centrica-owned firm. Another 2.5 million customers were wrongly informed that exit fees would apply to their tariff if they chose to leave.
Ofgem has instituted a regulation 49-day period for provider switching, to allow customers to switch without being hassled by firms or being required to make a snap decision in order to avoid a fine. A customer who switches during this period, as opposed to midway through a contract, is legally protected from exit fees.
Anthony Pygram, Ofgem’s director of conduct and enforcement, said: “British Gas failed its customers who were coming to the end of their fixed contracts and switched supplier by unfairly penalising them and applying charges in error. Many more customers could have been deterred from getting a better deal due to the incorrect terms and conditions. Our enforcement action against British Gas sends a strong message to all supplier that they must respect their customers’ rights during the switching window and always treat customers fairly.”
Centrica, the company that owns British Gas, stated via a spokesperson: “A system error led to a small proportion of customers being incorrectly charged. We’ve apologised to the customers affected. Those who were charged too much were promptly refunded as soon as we identified the issue and were paid an additional goodwill gesture. Some customers were provided with initial communications containing incorrect terms and conditions – but all other communications they received were correct.”
British Gas has agreed to appoint an external auditor to review both its customer plans and internal policies regarding fines. It has also corrected its terms and conditions to make it clear that customers could not be charged exit fees if they switch during the 49 day window.
The destination of money fined directly by Ofgem is its consumer redress fund, intended to help citizens’ advocacy and awareness charities for causes such as home energy efficiency and renewables awareness.