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British Gas Business Fined £5.6m

6 Years Later… Fined £5.6m for switching irregularities

In one of the longest running complaints about a business energy supplier, Ofgem have found British Gas Business guilty of a series of transfer, switching and renewal irregularities.

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Ofgem today announced:

“Ofgem’s investigations found that British Gas Business had incorrectly blocked business customers from switching to other suppliers and failed to notify customers when their contract was due to expire. In recognition of these failures, British Gas Business is paying £5.6 million in redress and penalty.”

These irregularities occurred over a 5-year period between 2007 and 2012 and were the subject of a number of industry and customer complaints including a claim for breach of energy market rules raised by independent supplier BizzEnergy in 2007 but dismissed as unproven by Ofgem.

BGBs defence was that these irregularities were caused by errors in their computer systems, and their failure to implement adequate processes and controls to detect when objections to switches were invalid.

It was additionally found that as had been suspected, BGB failed to properly communicate to customers the reasons for their objections to switching and how customers could resolve this.

Ofgem belatedly re-opened the investigation into BGB in 2012 despite having the issues brought to their attention 5 years earlier and despite their insistence that BGB wrongdoing could not be proven.

Ofgem however claim that BGBs response was swift, in that BGB curtailed these irregularities soon after the 2012 investigation was opened. This however was already 5 years after the offences first came to light.

In addition, Ofgem found that BGB did not provide the required notice to around 1,200 business customers that their contract was due to expire. In doing so this enabled BGB to trap the customers onto expensive rollover terms and prevented them from exercising their right to shop in the market for a better business energy deal.

BGB has committed to fully compensate their current customers affected by this issue. However there are many customers who have now moved to new suppliers that will be unlikely to see any recompense for BGBs wrongdoing.

Sarah Harrison, Ofgem Senior Partner in charge of enforcement said:

“The ability for consumers to switch easily and fairly is key to a well-functioning energy market. In these cases British Gas Business failed these consumers who were wrongly blocked from switching, many of them small businesses, and denied others the chance to switch to a better deal at the end of their contract.

“British Gas Business fully accepts its failings, has stopped the practices and corrected its processes to prevent this happening again. The company has taken responsibility for its actions and this package strikes a balance of penalty for the company and redress for affected consumers.

“British Gas Business cooperated fully throughout these investigations and this has been reflected in the level of the settlement package, which would have been much higher if this had not been the case.”

James Constant, CEO of Business Juice, said:

“I find it more than a little disingenuous of Ofgem to praise itself and BGB for their swift action when these activities had been well known and well complained about since 2007.

“For Ofgem not to reference their decision to not censure BGB in 2007 and 2008 for these activities and to allow a larger number of businesses to continue to suffer from these tactics in the intervening period was plainly wrong then and wrong now.

“It is for this reason that we are disappointed that Ofgem has not seen fit to compensate fully all affected business energy customers and indeed business energy suppliers who spent time and money acquiring valid customer contracts only to have them taken away by these irregularities.

“The least businesses deserve is an apology from Ofgem for not acting sooner.

“The credibility of Ofgem was in question in 2007, sadly the situation has been barely improved by their handling of this clear case of anti-competitive behaviour”.

Disclosure: James Constant was CEO of Bizzenergy in 2008 and led the action pressing for enforcement against BGB for these activities.



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