British Gas fined £5.6 million for preventing firms switching suppliers

Will Green is news editor of Supply Management
10 April 2014

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11 April 2014 | Will Green

British Gas Business (BGB) will pay penalties and compensation of £5.6 million after an Ofgem investigation revealed it had wrongly blocked companies from switching suppliers.

The energy regulator found the power supplier had raised an estimated 39,000 invalid objections to firms’ requests to switch between November 2007 and February 2012 – around 5.6 per cent of the total objections made.

Ofgem said there were legitimate circumstances in which a supplier can object to a customer switching, for example if money is owed on the account, but BGB’s computer systems contained errors that created invalid objections and there were “inadequate processes and controls in place to detect when objections to switches were invalid”.

“In addition, they did not properly communicate to customers the reasons for their objections to switching and how customers could resolve this,” said Ofgem.

The regulator also found between January 2010 and May 2011 BGB failed to give notice to around 1,200 business customers, mostly micro-businesses, that their tariff was about to expire, which meant they either continued on the same terms or were rolled over onto more expensive standard rates.

BGB was ordered to pay a penalty of £800,000 which will go to the Treasury, and it will also pay £1.4 million to affected businesses and put a further £3.45 million into a new “energy efficiency fund” to support micro-businesses.

Sarah Harrison, Ofgem senior partner in charge of enforcement, said: “The ability for consumers to switch easily and fairly is key to a well-functioning energy market. In these cases British Gas Business failed these consumers who were wrongly blocked from switching, many of them small businesses, and denied others the chance to switch to a better deal at the end of their contract.

“British Gas Business fully accepts its failings, has stopped the practices and corrected its processes to prevent this happening again. The company has taken responsibility for its actions and this package strikes a balance of penalty for the company and redress for affected consumers.”

Stephen Beynon, managing director of British Gas Business, said: “We’re sorry these errors occurred and have worked swiftly to change our computer systems and processes, putting controls in place to stop this happening again.

“We take any failure to meet our obligations very seriously and will ensure that the new energy efficiency fund we have set up will be a real help to hundreds of small businesses.”

 

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