Energylinx News

August 29, 2018

British Gas pays out £2.65m over exit fees and overcharging

There has been a victory for consumers today, as Ofgem orders British Gas to pay £2.65m. British Gas has paid the money directly to customers in refunds, compensation and redress.

The regulator found that British Gas had overcharged more than 94,000 customers who had switched to a different energy supplier and wrongly imposed exit fees on thousands of households.

Due to a system error, British Gas wrongly charged 94,211 customers its more expensive standard variable tariff rate after they decided to switch to a new energy supplier. Ofgem's investigation also found that British Gas provided 2.5m customers with incorrect terms and conditions, which stated that exit fees were payable.

Following Ofgem's findings, British Gas agreed to pay a further £244,770 in compensation to customers wrongly charged exit fees and the standard variable tariff and pay £1,050,229 into Ofgem's consumer redress fund.

Anthony Pygram, director of conduct and enforcement at Ofgem, 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.

"Ofgem put in place the switching window to help all customers switch before they are rolled onto their supplier's expensive default rate.

"Our enforcement action against British Gas sends a strong message to all suppliers that they must respect their customers' rights during the switching window and always treat customers fairly."

British Gas has since corrected its terms and conditions for customers to make clear they would not be charged exit fees during the switching window and changed its procedure for providing this information. It also agreed to appoint an external auditor to review the relevant policies and procedures.

A Centrica spokesman said:

"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."

Posted on August 29, 2018 at 08:29 AM