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British Gas must pay compensation over price guarantee shambles

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Written by: Paloma Kubiak and Helen Dewdney
12/04/2022
Former People’s Energy and Neon Reef customers who were moved to British Gas say they received misleading and confusing emails about the price they would pay for their energy. We’re calling for a public apology, compensation for customers and for the regulator, Ofgem, to investigate.
  • 380,000 energy customers moved to British Gas under Ofgem’s ‘Supplier of Last Resort process’
  • British Gas welcome emails say price is guaranteed until 30 June 2022 for former People’s Energy customers and 31 July 2022 for former Neon Reef customers. But they also say the price is variable
  • Customers were surprised to receive emails informing them their bills were going up on 1 April after believing they would be protected by British Gas’ price guarantee
  • We believe British Gas may not have met the Ofgem Standards of Conduct, the Consumer Protection from Unfair Trading Regulations 2008 and the Consumer Rights Act 2015
  • British Gas, Ofgem and the Energy Ombudsman are already dealing with complaints
  • Brian was awarded £270 compensation. Top tips to help you complain.

YourMoney.com and consumer champion, Helen Dewdney, The Complaining Cow, believe British Gas may not have met Standards of Conduct relating to its communication with, and treatment of customers.

We have submitted evidence to the energy regulator, Ofgem, and the Energy Ombudsman, calling on them to urgently investigate the issue.

With soaring inflation, food prices and energy bills, we urge ‘Big Six’ supplier British Gas to compensate customers who may have lost out financially as a result of the price guarantee email error.

What’s the British Gas issue?

On Tuesday 29 March, British Gas admitted to YourMoney.com that it made an error in emails sent out to customers informing them of an energy price guarantee which was expected to partially shield billpayers from the 1 April energy price cap hike.

These ‘welcome to British Gas’ emails were sent to former People’s Energy and Neon Reef customers who were moved to the energy giant after they ceased trading in September and November 2021, respectively.

In total, around 380,000 customers from these two failed firms were taken on by British Gas under Ofgem’s ‘Supplier of Last Resort’ (SoLR) process.

Former People’s Energy customers received emails telling them their price was guaranteed until 30 June 2022, while former Neon Reef customers were told their price was guaranteed until 31 July 2022.

In emails sent to former People’s Energy customers, under the ‘Your tariff and account information’ section of the welcome email, it stated the tariff (The Peoples Tariff) was variable, but it also stated that the “tariff ends on, and is guaranteed until 30 June 2022”.

In small print below, it includes: “Prices may increase or decrease at any time. We will give you 30 days advance notice before we increase your prices”.

Under the ‘Your tariff terms and conditions’ and ‘About your tariff’, it states: “The Peoples Tariff prices are set until 30 June 2022 at rates that are the same as the Ofgem price cap”.

“The price of your tariff won’t go up or down unless you change your tariff, change how you pay us, or the government or regulator does something or plans something that means the price must change. We’ll contact you if there is a change to your price”.

In the ‘At the end of the tariff’ section, it states: “Before this tariff ends, if you haven’t already switched to another tariff or supplier, we’ll contact you. If you don’t switch tariff or supplier before 1 July 2022, we’ll move you to the cheapest default tariff (no exit fees) we have available to you at that time”.

Finally, in the ‘Other things to bear in mind’ part, British Gas states: “We’ll only sell so many of these tariffs, and we might withdraw it. Our terms and conditions of supply also apply. If there is any difference between what we say in these terms and conditions and the supply terms, what we say in these terms takes priority”.

 

Why we believe British Gas may not have met standards

Ofgem’s ‘Standards of Conduct’ guidance “form the foundation stone of the gas and electricity supply licences” and are “enforceable overarching rules aimed at ensuring licencees treat each domestic customer fairly”.

It states that “suppliers should continually strive to adopt and embed a consumer-centric culture, and ensure their conduct results in all customers being treated fairly. These broad principles relate to how suppliers behave, provide information, and carry out customer service processes”.

There are four ‘limbs’ which suppliers must follow:

Behaviour towards consumers: Suppliers must behave and carry out any action in a fair, honest, transparent, appropriate and professional manner.
Providing customers with information: Suppliers must provide information (whether in writing or orally) which is complete, accurate, and not misleading, and displayed in plain and intelligible language, as well as being appropriate and fair. This means customers receive the right information – at the right time and in a suitable format – in order to make decisions about their energy supply.
Customer service processes: Suppliers must make it easy for consumers to contact them, act promptly to put things right when they make a mistake, and ensure customer service arrangements are fit for purpose.
Considering vulnerable domestic customers: Suppliers must identify and understand the characteristics, circumstances and needs of vulnerable customers and satisfy themselves that their actions are resulting in vulnerable consumers being treated fairly.

Energy suppliers must also give customers at least 30 days advance notice of price increases or changes in their contract which leave them significantly worse off. We believe Ofgem has met this rule.

‘Should not have happened in the first place’

Jonathan Whittle, senior manager at consumer action lawyers, Your Lawyers, says: “I always advocate that organisations should communicate clearly and accurately. This is important at a time when the cost-of-living crisis and energy price hikes are a cause of stress and worry for consumers. There is certainly an argument that any distress caused by the confusion is compensable.

“Communication should always be clear. As customers are reporting a great deal of confusion, and British Gas has acknowledged that an error has occurred, it stands to reason that the communication may not have been clear and accurate as it could have been in some cases.

“The Standards of Conduct sets out that information provided should be “complete, accurate and not misleading”, and be “communicated in plain and intelligible language, with more important information being given appropriate prominence”. It would appear that any potentially misleading language in any material received by consumers could breach these standards. Whether it does or not will depend on the communication issued, but any consumer who feels unfairly treated should complain. If they remain unsatisfied following a complaint, we encourage approaching the Energy Ombudsman.

“British Gas should have known better, particularly at a time when there is a great deal of concern and worry in respect of the cost-of-living crisis and the affordability of energy. The fact that this has happened following the collapse of previous energy companies that consumers were in contracts with compounds the issue. When you consider that this should not have happened in the first place, these compounding issues can certainly make things worse.”

‘Misleading at best and dishonest at worst’

Helen Dewdney, the consumer rights expert who has written two best-selling books on how to complain, adds that British Gas also appears not to have met the Consumer Protection from Unfair Trading Regulations 2008 and the Consumer Rights Act 2015.

Under CPUTR 2008 rules, for a practice to be unfair, they must harm, or be likely to harm, the economic interests of the average consumer. For example, when a shopper makes a purchasing decision they would not have made had they been given accurate information or not been put under unfair pressure.

A practice can also mislead through the information it contains, or its deceptive presentation, and causes, or is likely to cause, the average consumer to take a different transactional decision specifically; general misleading information, creating confusion with competitors’ products or failing to honour commitments made in a code of conduct.

Under the CRA 2015, services must be provided with reasonable skill and care. Under the ‘Unfair Contracts’ section, the law creates a ‘fairness test’ to stop consumers being put at unfair disadvantage. We believe an unfair contract may have been formed. Customers appear to have been put at an unfair disadvantage as the rights and responsibilities are tilted in British Gas’ favour.

Dewdney says: “It is my understanding that British Gas has not met these principles.

“Informing customers of a guaranteed rate, being variable and referring to fixed tariffs in the terms and conditions is misleading at best and dishonest at worst. It is not an appropriate way to treat customers and is far from professional.”

Whittle adds: “Whether British Gas is legally liable to issue compensation will come down to the terms and conditions in place. If any consumer has suffered distress arising from any confusion, or where the terms and conditions mean that British Gas must honour the commitments made in communication, then it is worth trying to pursue them for damages.”

Linda Malcher, solicitor at Thackray Williams, says: “I acknowledge British Gas has noticed its mistake. However, it has simply misled customers with the pricing.

“British Gas has misled the consumer and prevented them from making the decision to switch providers, therefore monopolising their share of the market at the loss of the consumer.

“Given the current situation and reliance placed on the email from British Gas, it should honour the mistake as it has potentially caused hardship for consumers for not having the exposure of shopping around, as they thought to have been protected by the price guarantee.”

‘I wouldn’t need to worry about price changes until next year – I trusted the information’

Paul Askew, operations director at Business Energy Direct who deals with energy enquiries and complaints, is a former People’s Energy customer who was transferred to British Gas.

He says: “I work in the industry and spend a lot of time ensuring our business customers are treated fairly by utility suppliers and that they comply with Ofgem regulations and UK law. While I regularly see errors made by suppliers, I was appalled by the misleading information British Gas issued to customers.

“I received the British Gas email which stated ‘you don’t need to worry about your tariff changing prices again until next year’. With the energy crisis and suppliers failing, this was reassuring.

“This email was followed by another on 15 October which provided more details of the tariff being set up. It said the Peoples Energy tariff was due to end on 30 June 2022 and underneath said ‘Price guaranteed until 30 June 2022’. With the pending price cap from 1 April 2022, it was a relief that British Gas said they guaranteed the price until 30 June. While other sections of the email referred to the tariff being ‘variable’ I trusted the information provided.

“I was shocked to receive an email on 2 March informing me the price was increasing in line with the energy price cap. What makes matters worse is I had a quote from an alternative supplier offering a fixed tariff until December 2022. When I reviewed the offer, I decided against it as my current price was guaranteed until 30 June.

“This prompted me to open a complaint with British Gas which is still being investigated.

“All suppliers are regulated by Ofgem and it has licence conditions which they must follow. I’m aware of industry regulations and understand my rights – a lot of customers affected by this won’t. The impact of this incorrect information to some families will be huge.”

‘I received £270 in compensation’

Brian, whose parents are supplied by British Gas, noticed conflicting information when he was checking their energy bills. He raised a complaint which was escalated to the British Gas Executive Office where he was offered a £100 ‘goodwill gesture’.

He declined this, insisting on £270 compensation based on his own estimate of the price difference to be over the three-month – April to June – period. British Gas paid out the £270.

“The key part which helped me win my parents’ case was that under Ofgem rules, prominence must be given to terms which are detrimental. In the email, the term stating that prices may go up with 30 days’ notice is dwarfed by the ‘your price won’t go up and down’.

“Ofgem rules also state that customers must be allowed to make an informed decision – and my parents chose to stay with British Gas under the suggestion the price was guaranteed for a few months.”

In its initial response to Brian’s complaint, David, a customer manager in the British Gas Executive Office, wrote: “I’m sorry you’re not happy that your parents have been sent information from us that indicates the Peoples Tariff isn’t a fixed rate tariff as they had previously been advised. I’m sorry for any confusion this may’ve caused you and we are aware that customers have previously been advised this tariff is fixed until 30 June 2022.

“This isn’t the case, and the Peoples Tariff is a variable rate tariff which will be impacted by the increase in the price cap in April 2022. Our dedicated webpage for Peoples Energy customers does refer to this as a variable tariff. The purpose of the end date is to ensure customers don’t remain on this tariff indefinitely. After the end date customers are moved off this tariff on to the standard variable tariff.

“We appreciate this has caused some confusion over the tariff and I apologise for this. In recognition of our error, I’m happy to apply a goodwill gesture of £100 to your parents’ account. Unfortunately, we won’t be able to fix the rates for your tariff until 30 June.”

If you’re not happy with British Gas, here’s how to complain

Dewdney lists these ‘BG tips’ to help you complain if you’re affected by this issue:

1) Put your complaint in writing so that you have evidence if you need to take the matter further, such as going to the Energy Ombudsman.

2) Send your complaint to the CEO of British Gas. The CEO may not respond personally but it should get the issue to the escalation team and resolved more quickly.

3) In your email/letter, state the date you received the contract and the date you received notification of the price rise.

4) Send copies of the evidence.

5) If you believe British Gas may not have met the Consumer Rights Act 2015 in providing an unfair contract, suggested wording includes: “I believe British Gas has not met the Consumer Rights Act 2015 in failing the ‘fairness test’ which stops consumers being put at unfair disadvantage.”

6) If you believe British Gas may not have met the Consumer Protection from Unfair Trading Regulations 2008, suggested wording includes: “I believe British Gas has caused me to take a different transactional decision that I might otherwise had taken if I had not been given the incorrect information. I could have looked for alternative providers had I been told that my tariff was not guaranteed. This has not met the requirements of the Consumer Protection from Unfair Trading Regulations 2008.”

7) If you believe British Gas may not have met the Ofgem Standards of Conduct, suggested wording includes: “I consider that British Gas has not met the Ofgem Standards of Conduct. Specifically:

‘Suppliers must behave and carry out any actions in a fair, honest, transparent, appropriate and professional manner.’ British Gas in my opinion has not met these five areas as described in my correspondence.”

Suppliers must provide information which is complete, accurate and not misleading (in terms of the information provided or omitted) and fair both in terms of its content and in terms of how it is presented. I do not think that British Gas has supplied the information in accordance with the above”.

8) Although it’s unlikely you’ll be put back on the fixed tariff, it doesn’t stop you requesting it or the difference in price. This may be a suitable paragraph to include: “This matter has caused me a lot of additional stress. I was led to believe that I was on a fixed tariff and now have to worry about finding the additional money at short notice. I expect to be put back on the tariff from the original contract that was sent and agreed. I also expect suitable redress for the inconvenience caused.”

Although some standard phrases can be useful, making the case individual to you is likely to elicit a more favourable outcome. Martyn James from the free online complaints and claims site, Resolver, agrees that key phrases can be used to add weight to your case, but British Gas is likely to reject a standard template letter.

He says: “You should personalise your letter so that your case is taken on an individual basis, ensuring that it will have to address the points rather than issuing a standard rejection response.”

He suggests using one of the following examples to include:

• “I was told by a member of staff that the letter was correct and that my price had been fixed”.
• “As I wasn’t told about the correct amount of money I owed, I’m now facing financial difficulties”.
• “If I’d received the correct information when the letter was sent out, I could have switched to a better deal with a competitor. However, those deals have all gone now”.
• “I’d planned my finances around the lower amount and now I can’t afford my bill”.

9) Request a response within seven days and state what you will do if you don’t get a satisfactory response.

This is one suggestion: “Should I not receive a satisfactory response from you I will not hesitate in taking the matter further. This will include, but not limited to, taking the matter through the Energy Ombudsman.”

10) If you’re not satisfied with the response, write back saying so, requesting further investigation and another offer or a deadlock letter, which means you will then be able to take the matter to the Energy Ombudsman.

What does British Gas say?

British Gas initially told YourMoney.com on Tuesday 29 March: “Due to a system error some tariff information labels incorrectly showed price guarantee dates. However, it was also made clear on this label that this was a variable tariff that would be subject to Ofgem price cap movements.”

Both YourMoney.com and Helen Dewdney have made several attempts to obtain a right of reply from British Gas and gather further information. Our emails and calls have gone unanswered since the original story was published two weeks ago.

An Ofgem spokesperson, says: “We’re speaking to British Gas about this as part of our regular contact with them. Our top priority is to protect consumers and make sure the market is fair for everyone.

“We take all reported breaches of licence conditions seriously and investigate them. When a supplier of last resort (SoLR) is appointed, we expect that company to provide accurate information and an acceptable level of customer service. If a billpayer has an issue, they should contact their supplier and if they do not get a satisfactory response, they can raise a complaint with the Energy Ombudsman.”

The Energy Ombudsman confirmed it has started to receive complaints about this issue. A spokesperson says: “Where a consumer isn’t able to resolve a complaint directly with their supplier, we’d encourage them to contact us for help to impartially resolve the dispute.”

It also told us it received some disputes about a ‘price promise’ email error from former PFP Energy customers. It had 82,000 customers but ceased trading in September 2021. Again, these customers were transferred to British Gas under Ofgem’s SoLR process. British Gas was also appointed to take on customers of these failed suppliers:

  • Social Energy Supply Ltd (5,000 customers) November 2021
  • Zebra Power Limited (14,800 customers) November 2021
  • Bluegreen Energy Services Limited (5,900 customers) November 2021
  • MoneyPlus Energy (9,000 customers) September 2021.

We welcome information from former customers of any of these failed firms to let us know if they have also received similar price guarantee emails.

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