British Gas forced to pay £2.65m in fines and compensation over invalid exit fees and overcharging

By September 19, 2018Commercial Energy

British Gas discouraged 2.5 million customers from switching to cheaper deals by wrongly threatening them with charges, Ofgem has found.

Yesterday the energy regulator hit British Gas with fines over the blunder and revealed it has forced it to pay compensation to customers who were made to pay.  British Gas wrongly informed 2.5 million customers that exit fees were chargeable if customers wanted to leave for another gas or electric provider during a 49-day “switching window”.  However, under Ofgem rules energy firms are forbidden from charging exit fees to customers leaving a fixed-term deal if they are within 49 days of the end date.

Of the 2.5 million people mislead into thinking an exit fee was due only 1,698 people paid the fee, with the collective charges totaling £64,968.  British Gas has paid £244,770 in compensation to customers wrongly charged exit fees as well as a fine of £1.1m into Ofgem’s consumer redress fund.

Last night experts described British Gas’s behaviour as “shoddy” and said such incidents were causing dissatisfied customers to leave Britain’s biggest energy companies for smaller firms in the hope of receiving a better service.  Peter Earl, head of energy at price comparison site, Compare the Market, said: “This shoddy behaviour, coupled with better deals elsewhere, is precisely why so many people are leaving the Big Six in droves.  “Sadly, it seems that many people just paid the wrongly imposed fees without even knowing. This is largely down to the fact that the energy market is too confusing.  There are still too few people actively engaged in their energy use and bills, and therefore too many people are stuck on very uncompetitive variable tariffs. To then wrongly penalise customers for switching, is a real kick in the teeth.”

The energy regulator Ofgem also said the Centrica-owned British Gas incorrectly moved customers who had decided to switch to another supplier to a more expensive tariff due to “a system error”. These customers were collectively overcharged by £782,450. Ofgem opened its investigation in July last year after being presented with a dossier of evidence of the wrongdoing by the consumer website MoneySavingExpert.com.

Guy Anker, deputy editor at MoneySavingExpert.com, said: “Such behaviour by big suppliers totally undermines the concept of switching by falsely putting people off with the threat of false charges. Then to actually overcharge tens of thousands of people rubs salt into the wound.  And as switching is the key weapon to escape rip-off tariffs and save customers big money, suppliers who wrongly threaten these charges – and sometimes even have the nerve to levy them – are betraying hard-working families trying to save what could be a crucial few hundred pounds a year.