British Gas threatened switchers with fees

Energy giant fined and told to pay compensation for flouting rules designed to protect consumers

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

The regulator yesterday fined the energy provider over the blunder and said it had forced British Gas to compensate customers who were made to pay exit fees.

British Gas wrongly told 2.5million customers that the fees, often more than £100, were due if they wanted to leave for another provider during a 49day “switching window”.

Ofgem rules forbid energy firms 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 misled into thinking a fee was due, only 1,698 paid, with the collective charges totalling £64,968, around £150 each. British Gas has paid £244,770 in compensation to customers wrongly charged exit fees as well as a fine of £1.1million into Ofgem’s consumer redress fund.

Experts described the conduct of British Gas 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 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.”

Ofgem also said that British Gas, owned by Centrica, had 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.

The regulator opened its investigation in July last year after being presented with a dossier of evidence by the consumer website Moneysavingexpert.com. Guy Anker, deputy editor at the site, 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.

“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.”

£1.1m The fine that British Gas has been ordered to pay into the Ofgem consumer redress fund over the fees scandal