Credit, Collections & Insolvency News
Business energy retailer United Gas & Power (UGP) has been hit with a £2.1 million financial penalty for multiple breaches of its licence conditions.
A two-year investigation by Ofgem concluded that UGP deliberately overcharged customers, did not return credit balances owed to former customers and repeatedly failed to properly communicate at time of contract renewal. UGP serves around 2,700 customers.
Ofgem found that, in February 2020, despite having actual consumption data available, UGP billed some customers on inflated consumption estimates, generating extra revenue for itself to remedy a shortfall in its budget. The average customer was overcharged by more than £2,000, with one customer overcharged by more than £22,000. Some of these amounts were not returned as promptly as they could have been, with some customers not receiving their money back for up to seven months after it was taken from them.
UGP has, however, proactively and prior to Ofgem’s intervention, apologised to the customers it overcharged and did make significant goodwill gesture payments to those customers.
In addition to the overcharging of consumers, eight other SLC breaches were identified, some lasting for five years and longer. These include the handling of credit balances on former customers’ accounts, whereby credits owing to customers were not returned promptly or at all, with UGP amassing just shy of £250,000 in credit balances from its microbusiness consumers (MBCs). UGP has now returned just over half this money, but some former customers cannot be located.
Ofgem has now agreed to settle the case with UGP, imposing a penalty of £2,111,798.00. UGP will pay a nominal fine of £1 and £2,111,798.00 (less £1) will be paid to Ofgem’s Voluntary Redress Fund. These monies will be distributed to appropriate organisations for the benefit of energy consumers.
In addition to the breaches relating to billing, UGP also breached SLCs relating to the proper identification of MBCs. This led to many of the customers affected not being afforded the relevant additional protections MBCs receive.
Furthermore, UGP also breached conditions relating to the provision of important information at the time of contract renewal, leaving many MBCs without the required information to make informed switching choices and take advantage of other deals available. In relation to the other breaches in the case, UGP has taken appropriate remedial actions to improve its processes and performance.
Cathryn Scott, Director of Enforcement and Emerging Issues at Ofgem said “UGP’s behaviour was unacceptable. No matter what financial difficulties companies may find themselves in, it is plainly unjustifiable and wholly unacceptable to deliberately overcharge customers to boost revenue.”
“In addition to this overcharging, it is concerning that UGP failed to return credit owing to former customers and retained such large sums in their own account; only refunding customers following Ofgem’s intervention.”
“These are very difficult times for businesses and energy consumers. This significant penalty should send a strong signal to all suppliers in the market to act with the utmost care and integrity when it comes to customers’ money.”
