British Gas to pay £9.5 million fine after billing problems

26 January 2017, 13:10   By Samantha Smith

OFGEM have ordered British Gas to pay £9.5 million in compensation to customers, after an investigation found that the provider was guilty of serious "customer service failings".

british gas van
Credit: Tom Gowanlock/

The penalty goes back to March 2014, when British Gas switched to a new IT billing system. As occasionally happens with such transitions, this switch resulted in "tens of thousands" of their business customers being "left with delayed and inaccurate bills".

Not only that, but 6,000 new customers experienced significant delays in registering with the supplier, while "many" of the complaints arising from these problems were "handled poorly or not on time."

As a result, they've been required to pay £9.5 million in compensation, which will not only go to affected small businesses, but also to the Money Advice Trust, who helped some of these businesses handle debt issues related to the episode.

The crime

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This splitting of fines is common practice now in the energy industry, with the record £26 million fine handed out to Npower in December 2015 being split between customers and the charities who essentially cleaned up their mess.

In that case, billing problems affected around half a million customers, whereas in the case of British Gas, they affected around 10% or so of the provider's 400,000 business customers.

Nonetheless, for those affected, the late and incorrect bills caused severe headaches.

According to Citizens Advice, some customers went 18 months without receiving a bill. Because of this, they were eventually asked to pay very large sums of money, and then had to spend several weeks corresponding with British Gas in order to reach a resolution.

Similarly, Ofgem write in their report that, during the first quarter of 2015, the number of small businesses British Gas failed to "bill accurately for at least two consecutive billing cycles reached an average of 45,000 per month".

And to top it off, several thousand new customers faced delays in switching to British Gas, putting them at risk of "higher tariff rates with their previous supplier for the energy they consume".

The atonement

These failings were bad enough, but as with the £18 million Scottish Power fine from April 2016, a central part of the fault resides with not doing enough to foresee and limit any potential problems before they arose.

It seems that British Gas charged excitedly into launching their new system. As Ofgem explain, the steps they "took to prevent service challenges did not fully mitigate the risks of disruption before they occurred. When significant issues did occur, BG did not always respond quickly enough and take sufficient action to resolve these issues."

Ofgem welcomes suppliers investing in new systems and recognises that this can be challenging. However, the £9.5 million payment also sends a strong reminder to all energy companies that they must treat consumers fairly at all times, including while new systems are put in place.
Dermot Nolan, Ofgem

British Gas did self-report the problems once they developed, however, a "mitigating" action that has saved them from receiving a bigger penalty than £9.5 million.

Commenting on their openness, Ofgem's CEO Dermot Nolan, said, "British Gas Business has done the right thing by coming forward to Ofgem to report problems with its new IT billing system, and has since worked hard to improve its customer service."

Citizens Advice's Gillian Guy also had some kind words for the provider, affirming, "It is good that British Gas Business reported its problems to the regulator and has worked to correct them. Energy firms need to plan ahead to minimise the impact of introducing a new billing system on their customers."

And just to be clear, British Gas do rank in the top five according to Citizens Advice when it comes to domestic customers service.

Still, this doesn't change the fact that they caused their business customers considerable stress and worry, which is ultimately why Ofgem have hit them with a such a steep penalty.

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