British Gas has been publicly called out by energy watchdog Ofgem for wrongly informing 2.5million customers about exit fees.
This follows a recent announcement that it will raising the cost of its standard variable tariff by 3.8% in October, a move that is due to affect 3.5 million households.
British Gas failed to inform their customers that they are responsible for paying exit fees, to be charged during the switching window of 49 days. Nearly 1,700 fixed-deal customers were hit with the charge during this switching window with collective costs reaching £63,968.
A Centrica spokesman 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.”
British Gas has now communicated that they have updated their terms and conditions to make clear to customers that if they are to change providers during the 49-day switching window, then they will not be faced with exit fees. Under usual licensing conditions, energy customers are within their rights of agreement to change providers during of after this window without being faced with an exit fee. This window was designed to help households change to a better deal before their policy renewed to a default tariff.
Ofgem exposed British Gas after discovering the overcharging of nearly 95,000 customers who decided to take up a policy with a new provider. Ofgem revealed the total collective charges were £782,450 which British Gas have stated was due to a system error.
The investigation started during July 2017, when demands were made for British Gas to refund every household that had been overcharged by £1 or more; the total compensation paid out for this was over half a million pounds. British Gas have agreed to pay £1.1 million into Ofgem’s consumer redress fund on top of £244,770 of compensation to the households who were incorrectly faced with exit fee charges.
A director at Ofgem stated: “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.”
He added: “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.”