British Gas is to pay a £20 million settlement after regulators concluded vulnerable customers were wrongly forced onto prepayment meters without adequate safeguards.
The intervention by Ofgem follows a lengthy investigation into the company’s conduct between February 2018 and February 2023, during which households claimed prepayment meters were installed under warrant despite serious concerns over vulnerability and affordability.
Under the agreement, British Gas will compensate affected customers and write off up to £70 million in debt owed by vulnerable households.
The regulator said the company had failed an “unacceptable number” of customers by allowing meters to be installed without proper consent or welfare checks.
Centrica, the parent group of British Gas, avoided a formal enforcement ruling after reaching what it described as an “alternative action” settlement with the watchdog.
The company has also agreed to conduct a comprehensive review of historical customer cases, potentially widening compensation eligibility to households affected between 2018 and 2021 who have not previously received redress.
Chris O’Shea, chief executive of Centrica, admitted serious failings had taken place.
“What happened should never have happened, and I am sorry to the prepayment customers who were affected,” he said.
The scandal became one of the most politically explosive episodes of Britain’s energy crisis after reports emerged of vulnerable households, including families with children and disabled customers, allegedly being forced onto prepaid systems during soaring energy costs.
Tim Jarvis, chief executive of Ofgem, said the regulator’s action had secured “a substantial package of redress, compensation, and debt write-off” for affected households.
Campaigners, however, warned the settlement should not mark the end of scrutiny surrounding the industry’s treatment of struggling consumers.
Simon Francis, coordinator of the End Fuel Poverty Coalition, accused British Gas of ignoring warnings dating back years.
“The results of the Ofgem investigation are truly shocking,” he said.
“They have confirmed that British Gas knew about these failings as far back as 2018, was warned again in 2021, and still did not take adequate action.”
He added that many households trapped in energy debt were suffering because of “five years of sky-high energy costs” while suppliers generated large profits during the crisis.
The case has intensified wider political and regulatory pressure on Britain’s energy sector following repeated accusations that suppliers failed to adequately protect vulnerable households during the cost-of-living crisis.
Leave a Comment