British Gas pays out £2.65m to customers wrongly charged for switching energy suppliers

The energy provider gave 2.5 million customers the wrong information about exit fees, which led to almost 100,000 of them being overcharged

British Gas has paid £2.65m in refunds and compensation after it gave customers incorrect information about exit fees, and overcharged some as their fixed deals wound down.

An Ofgem investigation revealed the company gave 2.5 million customers incorrect terms and conditions relating to their entitlement to a ‘switching window’ – customers are generally entitled to switch at any time during the 49 day period before a fixed deal expires without having to pay an exit fee.

That led to 1,698 customers being charged a total of £64,968 when they switched supplier during what should have been their grace period.

The utility also wrongly charged 94,211 customers its more expensive standard variable tariff rate after they decided to switch to a new supplier, due to a system error. Customers paid a total £782,450 more than they should have as a result.

The energy market watchdog opened its investigation in July last year, after concerns were raised by consumer website MoneySavingExpert.com.

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 [issued].

“Ofgem put in place the switching window to help all customers switch before they are rolled onto their supplier’s expensive default rate.”

He added, the watchdog’s 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”.

The regulator said that before and during the investigation British Gas corrected its terms and conditions for customers, to make clear they would not be charged exit fees during the switching window.

A Centrica spokesperson: “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.”

The energy provider recently raised its bills for the second time this year, a move that will affect 3.5 million UK households.