British Gas Fined £2.65m for Overcharging Mistakes and Malpractice
Energy giant British Gas has been fined £2.65 million by Ofgem for a variety of misdeeds and illegal practices. Ofgem’s investigation, which was opened in June 2017, concluded that the firm be required to pay out over £500,000 in compensation to customers overcharged on tariffs, nearly £250,000 to those affected by wrongly charged exit fees, and over £1 million in fines to Ofgem.
Among the issues cited by Ofgem were that British Gas was wrongly charging customers exit fees, automatically switching customers onto more expensive standard tariffs, and wrongly informing others about the possibility of exit fees. British Gas acknowledged the faults, blaming system errors and saying that those overcharged were “promptly refunded as soon as we identified the issue and were paid an additional goodwill gesture.” Energy companies are required to provide a 49-day period in which customer can switch provider for free, but British Gas wrongly informed customers wishing to do so that they could still be charged in that period, dissuading them from exiting the firm.
Anthony Pygram, Ofgem’s director of conduct and enforcement, 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. Our enforcement action against British Gas sends a strong message to all supplier that they must respect their customers’ rights during the switching window and always treat customers fairly.”
Brexit Poses a Risk to Country’s Internet Service Providers
According to new research published by the financial analysis firm Plimsoll Publishing, Internet Service Providers (ISPs) are among the top 10 industries most threatened by Brexit, especially in the increasingly likely event of a ‘No Deal’ exit.
Of the 227 ISPs analysed by Plimsoll, 79 were found to be ‘in danger’ – according to the firm, 90% of companies that they rate as such fold within 2 years. The most obvious hit to the UK internet industry is the loss of EU funding for broadband projects, especially accessibility projects in more difficult to reach areas that aren’t commercially viable. Individual customers are most likely to notice higher roaming charges in the EU – especially since most mobile plans have been rolled out EU-wide in the last few years. The actual details won’t be known until the UK actually leaves, or a concrete plan is drawn up.
Christopher Evans, Plimsoll’s Senior Analyst, said: “The chances of the UK leaving the EU without a trade deal appears to have increased significantly of late. While some openly welcome such an outcome, for many industries it will make a tough job even harder. Many UK sectors rely on the frictionless trade and common regulations that being in the EU affords them, however, this could all change on Friday 29th March 2019 [scheduled exit date].”
O2 Launches New ‘DIY’ Mobile Phone Plan
The mobile operator O2 has announced a new mobile phone plan that allows the customer to customise both the benefits of the plan and the way of paying it. The new plan comes with effectively unlimited minutes, but allows you to choose the monthly data allowance, as well as how often you pay and when, for a span of 3 to 36 months. Even the upfront payment for a handset can be decided by the customer, who is also free to pay their way out of the plan to fulfil their contract if they wish to leave – the handset being supplied unlocked from the sim. Data flexibility allows customers to choose a low limit for what they know might be a low-usage month, and the reverse for a high-usage one.
One downside of this plan is the difficulty it creates when attempting to compare against any other plan, whether from O2 or a rival provider, as it doesn’t easily fit into any categories.
Npower SSE Merger Provisionally Cleared by CMA
The Competition and Markets Authority (CMA), the government watchdog responsible for overseeing business competition, has provisionally given the go-ahead for the merger of SSE and Npower, two of the UK’s largest energy firms.
The plan, to merge SSE’s household energy division into Npower’s UK setup, was announced in November 2017. The new provider would be the country’s second largest energy firm, after British Gas. The positives for the firms are based on administrative cost-cutting and the possession of even greater weight on the supply chain, allowing lower gas and electricity prices. Analysing the move, George Salmon, from investment firm Hargreaves Lansdown, said that “the combination with Npower means potential cost savings, and should help restore the benefits of scale that have been eroded by steadily declining customer numbers.”
The CMA launched an inquiry based on concerns over the impact that this would have on household bills, with one less competitor for major firms. The watchdog has not found enough evidence that the deal would have a major impact on consumer tariffs, however, withdrawing its opposition to the merger.
Anne Lambert, chair of the inquiry group, said: “It is vital that householders have a range of energy suppliers to choose from so they can find the best deal for them. With more than 70 energy companies, we have found that there is plenty of choice when people shop around.”
The deal is projected to be completed, at least on paper if not on the ground, by the end of the year, with SSE chief executive Alistair Phillips-Davies saying that he was “confident” that all would be sorted by the end of the financial year at latest (31st March 2019).
Steep Price Hikes One Day After Broadband Contract Conclusion
Broadband companies massively inflate prices as soon as a customer’s contract ends, according to new figures. The worst offender, BT, raises its prices by 82%, from an average of £24.99 a month in-contract to £45.49 immediately after. The average price hike for all providers of standard ADSL broadband is 62.5%, working out at about £150 a year. Fibre is little better, with an average increase of 52.9%.
As it stands, broadband providers aren’t legally required to warn customers about their contract ending, so many accidentally end up paying far more than they were expecting. According to uSwitch, 89% of broadband users said they’d look for a better deal if they realised that their contract was ending. Ofcom, the communications watchdog, is currently looking at instituting rules that would required broadband providers to notify their customers that their contract was ending and that they were moving onto higher rates to avoid such an ‘awareness penalty’.
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.”
An internet connection is as essential to a student house as a bathroom cleaning rota and a set of dinged up pans donated by someone’s mother.
We’ve got another roundup of the week’s mobile, energy and broadband stories for you:
Hard of Hearing Customers Given Helping Hand by EE
Mobile operator EE has announced that it will improve its service for deaf customers through a partnership with the charity Action on Hearing Loss. Amongst other policies, AoHL will conduct assessments of EE’s call centres and help to develop best practices for supporting customers with hearing loss. EE has employed the use of the Next Generation Text relay service for customers without the ability to hear on the telephone, and employs British Sign Language interpreters on their Customer Disability Team.
EE has also announced that it will tailor some mobile plans towards hard of hearing customers, including reducing unnecessary voice minutes in favour of a greater data allowance and a range of accessibility features, in a move which the company claims demonstrates how they intend to “better align with how customers with hearing loss prefer to communicate.”
The move comes in response to a damning report that castigated the UK’s leading ISPs and mobile operators for their lack of help for hard of hearing customers.
James Rowe, AoHL’s executive director, responded positively to EE’s changes: “We are very pleased to be partnering with EE as they provide some of the best support for the one-in-six people in the UK who are living with deafness or hearing loss. It is very encouraging to see a company like EE proactively taking steps to make sure that their customers living with deafness and hearing loss are not being financially disadvantaged and are able to access phone packages that are better suited to their needs.”
Major Challenger Bulb Gets Large Investment
Start-up gas and electricity supplier Bulb has announced that it has received £60 million of funding from two important international technology investment firms, DST Global and Magnetar.
The firm has recently become a major player in the UK supply market, attracting over 300,000 households, or 1% of the UK market, in the last three years alone. Bulb prides itself on supplying 100% renewable electricity and 10% of its gas from biomethane or recycled matter.
Tom Stafford, Managing Partner at DSR Global, said: “We are delighted to partner with Hayden [Wood] and Amit [Gudka, Bulb’s co-founders] as they build an internet and technology driven business to reduce cost for consumers, improve the quality of service and promote the use of renewables in the UK energy market.”
The investment will allow Bulb to expand quicker, taking on more staff and branching out into other areas of the market, while allowing it to retain its cheap and competitive energy tariffs.
Labour’s ‘Digital License Fee’ Plans Slammed by ISPs
The UK Internet Services Providers’ Association (ISPA) this week has slammed Labour leader Jeremy Corbyn’s proposal to introduce a new ‘Digital Licence Fee’ as a way of retaining income while getting rid of the TV licence fee. The fee would not be paid by customers, but by the broadband providers themselves.
Mr Corbyn said: “A digital licence fee, supplementing the existing licence fee, collected from tech giants and Internet Service Providers, which extract huge wealth from out shared digital space, could allow a democratised and more plural BBC to compete far more effectively with the private multinational digital giants like Netflix, Amazon, Google and Facebook.”
It is uncertain whether Corbyn is referring to the Internet Service Providers themselves – companies like Virgin Media, TalkTalk etc. – or content providers, such as Netflix, Amazon (Prime), and so on. In both cases, and proportionate tax based on usage would inevitably lead to higher prices for customers, negating the lack of licence fee.
In a statement, the ISPA argued as such: “Today’s call by the Leader of the Opposition, Jeremy Corbyn, to impose a levy on Internet Service Providers to help fund a ‘digital licence fee’ runs the risk of undermining broadband investment and could lead to increased prices for all consumers.”
Hinkley Worker Fall Leads to Prosecution
The Energy supplier EDF is to be prosecuted by the Office for Nuclear Regulation (ONR) after a worker suffered an injury from a fall at its Hinkley Point B plant in Somerset last year. Defending alongside partner engineering firm Doosan Babcock Ltd. (the worker’s employer) the ONR is bringing a case based on the UK’s Health and Safety Laws, with proceedings starting 12th September at Bath Magistrates’ Court. The worker was hurt after ‘falling from height’ in 2017, according to a preliminary report.
EDF’s Hinkley Point B nuclear power station is due to be decommissioned in 2023, being replaced by the Hinkley Point C plant next door.
The ONR issued a statement on the case, saying that “the incident was a conventional health and safety matter and there was no radiological risk to workers or the public.” Doosan Babcock said that it was co-operating fully with the investigation and that it would provide any assistance needed to the ONR. EDF has yet to issue a response.
Gov Announces £9bn Business Boost Thanks to Superfast Broadband Expansion
This week the Government has announced that their Broadband Delivery UK service has provided a boost to local businesses worth an apparent £9 billion increase in turnover. The independent report, entitled ‘The Evaluation of the Economic Impact and Public Value of the Superfast Broadband Programme’, also found that public investment has led to the creation of nearly 50,000 new jobs in local areas and a twelvefold dividend in investment by the Government and local authorities.
A main target of the Government’s current broadband policy is to increase service in rural areas that are deemed ‘commercially unviable’, especially more isolated areas of Scotland and Wales with small populations. Broadband can now be accessed by 95.39% of UK premises, and around 5 million new homes and businesses have access to superfast broadband – the target for superfast alone being 98% of UK properties in the next few years.
Margot James, the Minister for Digital, said: “Our rollout of superfast broadband across the UK has been the most challenging infrastructure project in a generation but is one of our greatest successes. We are reaching thousands more homes and businesses every week, that can now reap the clear and tangible benefits that superfast broadband provides. We are helping to ensure the downfall of the digital divide.”
The Government announced this week that their Broadband Delivery UK service and other plans to extend the superfast broadband network around the country have led to a boost of £9 billion for companies both small and large.
A start-up that automatically finds and switches consumers onto the cheapest energy tariffs has won the best ever investment on Dragon’s Den.
Disengaged energy customers are eight times more likely to switch supplier if they were shown personalised calculations of the amount of money they could save, without needing to provide details of their current tariff and consumption, a trial by energy regulator Ofgem has found.