British Gas has reached a settlement of £20 million following a scandal involving prepayment meters. In addition to the settlement, the company will compensate customers and forgive around £70 million in debt owed by vulnerable households as part of an agreement with the energy regulator, Ofgem.
The controversy arose three years ago when it was revealed that debt agents, acting on behalf of British Gas, had unlawfully installed prepayment energy meters in the homes of vulnerable customers. Ofgem disclosed that issues related to this scandal had been brought to British Gas’ attention in an external review back in 2018 and an internal audit in 2021. Despite some corrective actions taken by the company, Ofgem deemed them insufficient.
Affected customers from the period between 2018 and 2021 will receive compensation, in addition to funds that British Gas had already paid to impacted customers in 2022 and 2023. The exact amount to be refunded is undisclosed, but it is estimated that a few thousand customers will benefit.
Tim Jarvis, CEO of Ofgem, emphasized British Gas’ failure in handling a significant number of vulnerable customers who had prepayment meters installed without consent. He commended the company for taking corrective measures to rectify the situation and ensure redress, compensation, and debt relief for customers.
Chris O’Shea, the group chief executive of Centrica, British Gas’ parent company, expressed regret for the incident and apologized to affected prepayment customers. He acknowledged the need to rectify mistakes and stated that immediate actions were taken to improve processes and customer engagement regarding debt, especially for those in vulnerable circumstances.
Dame Clare Moriarty, Chief Executive of Citizens Advice, hailed the settlement with British Gas as a consequence of the unacceptable behavior exposed in the prepayment scandal. She stressed the importance of compensating those affected and warned energy suppliers against jeopardizing consumer welfare.
Simon Francis, coordinator of the End Fuel Poverty Coalition, labeled the findings of Ofgem’s investigation as shocking. He criticized British Gas for knowingly imposing prepayment meters on customers, including those with disabilities and families with young children. While the financial penalties and debt write-offs resulting from the investigation are substantial, Francis cautioned that the resolution does not mark the end of the issue.
Minister for Energy Consumers Martin McCluskey emphasized the necessity of consumer trust in the energy market. He condemned the forced installations of prepayment meters as a national scandal and praised Ofgem and British Gas for taking responsibility to address the situation. McCluskey underscored the importance of ensuring that victims receive full compensation and highlighted ongoing reforms to prevent similar injustices in the future.
