British Gas to pay customer settlement after force-fitting of prepayment meters

Energy regulator Ofgem has announced it closed its investigation into British Gas on its treatment of customers who had a prepayment meter (PPM) installed without their permission, with consumers set to benefit from the settlement agreement made with the regulator.

Ofgem’s investigation concluded that British Gas failed to meet the standards required of an energy supplier when installing prepayment meters, and that it breached licence conditions specifically designed to protect customers in vulnerable situations.

In recognition of Ofgem’s findings, British Gas has agreed to pay a £20 million payment into Ofgem’s Voluntary Redress Fund.

In addition, British Gas has agreed to a settlement package which includes compensation to affected customers in the period 2018-21. These payments are in addition to the compensation British Gas had already proactively paid to affected customers in the period 2022-23.

It will also write off up to £70 million of energy debt for vulnerable customers in accordance with a framework agreed by Ofgem, a proportion of which may be used as compensation for some customers. It will also continue to provide the remainder of a £22.4 million voluntary support package British Gas launched in 2023, aimed specifically at supporting PPM customers. It will also create a new Vulnerable Customers Debt Advisory Panel to inform and support British Gas in its ambition to develop industry-leading practices in the treatment of vulnerable customers in debt.

Customers who are due compensation will be contacted by British Gas and do not need to take any action. Compensation will be credited or paid directly to customers.

The investigation has been one of the most detailed and complex in the regulator’s history, involving analysis of customer cases and a comprehensive review of all British Gas’ related policies and procedures over a five-year period, covering every aspect of customer debt journeys.

Ofgem also gathered and reviewed evidence from Citizens Advice and the Energy Ombudsman about thousands of customer experiences in relation to the case.

British Gas accepts that it fell short in its treatment of vulnerable customers in the installation of PPMs and has taken action to address these failings. It has also committed to develop industry-leading practices in the treatment of vulnerable customers in debt going forward.

As a result of British Gas agreeing to these actions, Ofgem considers that this investigation is suitable for resolution via alternative action, as per its Enforcement Guidelines.

Tim Jarvis, CEO of Ofgem, said “It is clear that British Gas fell short in its treatment of an unacceptable number of vulnerable customers who had a PPM installed without consent, and it’s right that they’ve taken action to put things right. Because of our action customers will receive a substantial package of redress, compensation and debt write off.

“The installation of prepayment meters under warrant should only be a last resort, with rigorous checks to ensure debt is recovered lawfully, proportionately and safely. Smart pay as you go meters are a positive choice for many customers, helping them stay in control of their energy use and reporting high levels of satisfaction. Anyone worried about paying their bill should contact their supplier as early as possible to access the support available and discuss the options that suit their circumstances.

“This investigation forms part of Ofgem’s wider work to raise standards across the energy market and strengthen consumer protections. We continue to challenge suppliers to do more to identify and support customers in difficulty and proactively offer support, and our priority remains driving lasting improvements so customers can have confidence they will be treated fairly.”