- The firm’s end-of-contract failures impacted more than 70,000 consumers
Shell Energy has been fined £1.4million by Ofcom for failing to prompt out-of-contract phone and broadband customers to get a better deal.
The communications watchdog fined Shell’s UK consumer gas, electricity and broadband business £1.4million, after it broke ‘important consumer protection rules’ designed to ensure customers get a fair deal.
The communications failures impacted more than 70,000 customers of Shell Energy, which is expected to be acquired by Octopus Energy by the end of this year.
Firing a warning shot to other phone and broadband firms, Ofcom said that its action ‘sends a message to the whole industry’ on keeping customers in the dark over the potential savings offered by a new deal.
Ofcom fined the oil and gas giant £1.4million because it had broken ‘important consumer protection rules’ designed to ensure that customers get a fair deal
The rules introduced by the watchdog in 2020 require providers to ‘proactively prompt’ customers before their existing contract is up, while also giving them information about the best possible deal.
It also requires providers to send notifications to customers who are already outside of their minimum contract period on at least an annual basis, reminding them that they are free to leave or switch deals.
An ‘end-of-contract’ notification must be sent either by text, email or letter, between 10 and 40 days before the customers’ minimum contract period expires.
Ofcom’s investigation found that Shell Energy had failed ‘to send the required end-of-contract notifications and annual best tariff notifications to some of its customers’.
It reported that 72,837 customers were affected by the failures between March 2020 and June 2022.
Some customers did not receive any notifications, while others received some that included inaccurate or incomplete information.
Of this, 7,750 customers received an end-of-contract notification that contained incorrect information about the price they would pay upon the expiry of their minimum term period.
This resulted in 6,054 paying higher charges than they were originally quoted, collectively amounting to £398,417.67 – an average of £65.81 each.
Suzanne Cater, enforcement director at Ofcom, said: ‘Everyday tens of thousands of customers come to the end of their phone or broadband contract and can make significant savings by switching provider or signing up to a better deal.
‘That’s why our rules, which demand that providers prompt customers with the information they need to take action, are so important.
‘Shell Energy’s failings represent a serious breach of our consumer protection rules and they must now pay the price. This sends a message to the whole industry that we won’t hesitate to step in on behalf of customers if they don’t play by the book.’
Earlier this year, it was revealed Shell Energy received the most complaints of any provider for both broadband and landline services between October and December 2022.
The firm had 27 complaints per 100,000 broadband customers and 25 grievances for every 100,000 landline users.
Shell Energy’s fine is payable to HM Treasury within four weeks.
Ofcom said: ‘This penalty includes a 30 per cent discount from the amount Ofcom would otherwise have imposed following Shell admission of liability and agreement to enter into Ofcom’s settlement process.’
Shell also refunded affected customers but decided against refunds lower than £3 to ex-customers, instead opting to donate the equivalent amount to charity; this included unclaimed refunds.
Ofcom required Shell Energy to make refunds available to these customers should they request it.
A Shell Energy Broadband spokesperson said: ‘Transparency and clarity for our customers is something we believe in strongly so we were extremely disappointed to have let some customers down in the past by not providing them with the notifications and accuracy we should have.
‘As soon as we became aware of the errors we self-reported to Ofcom, rectified the issues, compensated customers and supported Ofcom in its investigation.
‘We apologise to any customer who we let down. Over the past 12 months we’ve made substantial improvements in our broadband customer service experience, dramatically reducing complaints and boasting one of the fastest call-answer times in the country.’
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