You are here: Home - Household Bills - News -

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

0
Written by:
29/08/2018
British Gas has paid £2.65m in refunds, compensation and redress after overcharging more than 94,000 customers.

Regulator Ofgem found the energy giant charged 94,211 customers a more expensive standard variable tariff rate after they decided to switch to a new supplier, due to a system error. Customers were overcharged £782,450, according to Ofgem.

It also provided 2.5 million customers with incorrect terms and conditions, which stated that exit fees were payable during the 49 day period before their fixed deal expires, and incorrectly charged exit fees totalling £64,968 to 1,698 fixed deal customers.

A customer is entitled to switch at any time during or after this “switching window” without having to pay an exit fee.  The switching window is designed to encourage customers to switch to a better deal before they are rolled onto a default tariff at the end of their contract.

Ofgem opened an investigation in July 2017 following concerns raised by MoneySavingExpert.com.

Before the investigation concluded, British Gas refunded in full all customers who had been overcharged by more than £1 and paid £502,633 in compensation to them.

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 paid £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.”

‘We’ve apologised to customers’

A statement from British Gas parent company Centrica, 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.

“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.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Is the longest bull market in US history set to continue?

Last week the S&P 500 posted a modest gain marking the longest bull market in US history. This bull market...

Close