Energy regulator Ofgem has found that 18 suppliers did not adhere to price protection rules, which protect a customer’s tariff price when they decide to either switch suppliers or tariffs after a price increase.
Several of the suppliers self-reported the issue to Ofgem. Following this, all suppliers were requested to self-assess their practices, which revealed that 18 suppliers were not compliant between 2013-2020.
In total, over 1 million customers were overcharged over £7.2 million.
The customers affected included:
- Those on a standard variable tariff who switched to another supplier but did not have their variable tariff price protected during the switch.
- Customers on a fixed-term tariff who switched to another supplier but did not have their fixed term tariff protected during the switch.
- Customers on a fixed-term tariff who moved to another tariff with their supplier but did not have their fixed-term tariff protected during the switch.
According to Ofgem, most of the failures were down to suppliers not having adequate arrangements in place to make sure the protections were applied in full when customers decided to switch.
The suppliers have since agreed to refund all affected customers, and in some cases make goodwill payments, to the tune of £10.4 million. Where it has not been possible to process refunds, the suppliers have agreed to make payments to the energy redress fund.
Anna Rossington, interim director of retail at Ofgem commented: “Customers should have confidence in switching and not be overcharged when doing so.
“This case sends a strong message to all suppliers that Ofgem will intervene where customers are overcharged and ensure that no supplier benefits from non-compliance.
“It also shows that, where appropriate, Ofgem is prepared to work with suppliers who have failed to comply with the rules, but who are willing to self-report issues and put things right for their customers.”
Ofgem has now closed this compliance engagement without taking formal enforcement action, taking into account the suppliers’ cooperation with the regulator, and the steps they have taken to address their failings.
The suppliers, number of customers affected, and redress payments are as follows:
|Supplier||Number of customers affected||Total Detriment (£)||Total Redress Package|
|British Gas/ Centrica||141,415||£391,176.79||£1,269,095.47|
|E (Gas and Electricity)||20,870||£68,777.23||£ 72,772.93|
|Green Star Energy||79,083||£664,661.00||£808,351.00|
|So Energy||10,514||£59,723.56||£ 78,480.89|
Ofgem has published a compliance note on the matter, which can be found from the regulator’s website.