British Gas is set to pay a £20million settlement to thousands of customers impacted by the firm’s prepayment scandal, Ofgem has confirmed.
The nation’s energy regulator has taken action the energy firm and demanded compensation is paid to customers who had a prepayment meter installed without permission.
Ofgem’s investigation looked into installation activity between February 2018 and February 2023.
At the time customers claimed they had prepayment meters installed under warrant without adequate safeguards in place.
British Gas will pay £20million in compensation
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GETTYCentrica, which is the parent company of British Gas, announced the issue has been addressed through “alternative action” with the regulator, avoiding a formal enforcement ruling in lieu of Ofgem’s redress fund.
On top of the £20million payment, British Gas is set to write off up to £70million in energy debt owed by vulnerable customers.
The energy firm will also carry out a comprehensive review of customer records from the period to identify those eligible for further compensation.
Households affected between 2018 and 2021 will now claim redress for the first time, extending beyond the compensation already paid to those affected in 2022 and 2023.
Installing prepayment meters without a household’s permission to pay back debt was temporarily banned last year | GETTY | PA
Centrica owner Chris O’Shea apologised to those affected
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GETTYChris O’Shea, Centrica’s chief executive, said: “What happened should never have happened, and I am sorry to the prepayment customers who were affected.”
Tim Jarvis, the watchdog’s chief executive, said: “It is clear that British Gas fell short in its treatment of an unacceptable number of vulnerable customers who had a prepayment meter installed without consent, and it’s right that they’ve taken action to put things right.
“Because of our action, customers will receive a substantial package of redress, compensation, and debt write off.”
Simon Francis, coordinator of the End Fuel Poverty Coalition, commented: “British Gas has finally been held to account for the forced pre-payment meters scandal.
“The results of the Ofgem investigation are truly shocking. They have confirmed that British Gas knew about these failings as far back as 2018, was warned again in 2021, and still did not take adequate action.
“That means the firm knowingly forced prepayment meters onto customers, potentially including those with disabilities and families with young children.
“While the £20million fine, combined with up to £70million in debt write-offs, is a significant outcome to the investigation, it should not be mistaken for the end of this story.
“Households in energy debt are not there through choice. They are struggling because of five years of sky-high energy costs and an energy industry that has generated extraordinary profits while households suffer.”