Energy supplier British Gas has paid out £2.65million in refunds, compensation and redress after overcharging 94,211 customers switching to a new provider and wrongly imposing exit fees on thousands of households, regulator Ofgem said today.
Ofgem said Centrica-owned British Gas misinformed customers by issuing incorrect terms and conditions about exit fees, wrongly charged them to some customers and applied incorrect charges to others after their fixed deal came to an end.
The supplier wrongly charged 94,211 customers its more expensive standard variable rate tariff after they decided to switch to a new supplier, due to a system error.
Energy supplier British Gas has paid out £2.65 million in refunds, compensation and redress
These customers were overcharged by £782,450, according to Ofgem.
It also said British Gas wrongly informed 2.5 million customers that exit fees were chargeable during the 49-day period before their fixed deal expires and incorrectly charged exit fees totalling £64,968 to 1,698 fixed deal customers.
Ofgem, which opened its investigation in July last year, said before it had concluded its probe British Gas refunded all customers overcharged by more than £1 and paid out £502,633 in compensation to them.
The provider has also agreed to pay a further £244,770 in compensation to customers wrongly charged exit fees and the standard variable tariff and pay £1.1 million 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
‘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.’
A Centrica spokesman told MailOnline: ‘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.
‘We note Ofgem has acknowledged that we have already addressed this issue and that we have changed our processes to ensure the error has been corrected.’