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Shell Energy fined £1.4m over ‘end-of-contract’ failures

Shell Energy fined £1.4m over ‘end-of-contract’ failures
Paloma Kubiak
Written By:
Paloma Kubiak

Shell Energy has been fined £1.4m after failing to prompt more than 70,000 phone and broadband customers to review their contracts, with some paying a total of £400,000 more than expected.

A total of 72,837 customers were affected by Shell Energy’s “serious breach of rules” between March 2020 and June 2022.

As part of regulator Ofcom’s rules introduced in 2020, telecoms providers must prompt customers before their existing contract is up and provide important information to help them compare prices. Customers should also be reminded if they’re already outside their minimum contract period to prevent them overpaying.

However, Shell Energy broke these rules by failing to send the required end-of-contract notifications and annual best tariff notifications to tens of thousands of customers.

In some cases, it failed to send this information at all, while in some notifications sent to customers, it included inaccurate or incomplete information, due to “manual errors and systems and process failures” at Shell Energy.

Further, 7,750 customers received an end-of-contract notification that contained incorrect information about the price they would pay once the minimum contract period came to an end.

For 6,054 customers, it meant they paid higher charges than they were originally quoted – totalling £398,417.67, or £65.81 each.

Following the investigation which revealed the failures, Shell Energy admitted liability and agreed to enter Ofcom’s settlement process. As a result, the £1.4m fine represents a 30% discount from the amount it would otherwise have had to pay after it self-reported to the regulator.

Ofcom said, in setting the level of financial penalty, it considered this was a “serious breach”, but added that it had co-operated closely with the investigation and proactively took steps to remedy the breaches.

Further, since the contravention, it has also made a number of changes to its systems and processes to help prevent future recurrence.

Affected customers have been refunded, with payments lower than £3 due to ex-customers being donated to charity, though refunds are available to these customers should they request it.

‘Shell Energy must now pay the price’

Suzanne Cater, enforcement director at Ofcom, said: “Everyday tens of thousands of customers come to the end of their phone or broadband contract and can make significant savings by switching provider or signing up to a better deal. That’s why our rules, which demand that providers prompt customers with the information they need to take action, are so important.

“Shell Energy’s failings represent a serious breach of our consumer protection rules and they must now pay the price. This sends a message to the whole industry that we won’t hesitate to step in on behalf of customers if they don’t play by the book.”

‘Extremely disappointed to have let some customers down’

A Shell Energy Broadband spokesperson, said: “Transparency and clarity for our customers is something we believe in strongly so we were extremely disappointed to have let some customers down in the past by not providing them with the notifications and accuracy we should have. As soon as we became aware of the errors we self-reported to Ofcom, rectified the issues, compensated customers and supported Ofcom in its investigation. We apologise to any customer who we let down.

“Over the past 12 months we’ve made substantial improvements in our broadband customer service experience, dramatically reducing complaints and boasting one of the fastest call-answer times in the country.”

End-of-contract rules

Under the Ofcom rules, telecoms and pay-tv companies must issue an ‘end-of-contract’ notification to customers – by text, email or letter – between 10 and 40 days before their minimum contract period comes to an end.

They must also send notifications at least annually to customers who are already outside of their minimum contract period, reminding them that they are free to leave or change deal.

Both notifications must include ‘best tariff’ information that will help customers understand whether they can save money by changing provider or signing up to a new deal.