British Gas Business To Pay £5.6m Penalty

Ofgem has fined the arm of British Gas which serves business customers for a series of failures including blocking firms from switching to other suppliers.

The energy regulator said British Gas Business would pay a total penalty of £5.6m.

It said £800,000 of that sum would be in fines, on top of £1.3m already paid to 1,200 customers who ended up paying higher bills because they were not notified when their contracts were due to expire.

A further £3.45m would go to an energy efficiency fund, Ofgem said.

It blamed a computer error for the blocking of customers wanting to switch and said the company failed to communicate properly with those affected.

The regulator found customers lost out financially

The watchdog said it meant 5.6% of objections British Gas Business made to customers switching suppliers between 2007 and 2012 were "invalid".

Firms can be stopped from switching if they have outstanding balances on their accounts.

Ofgem concluded that the additional failure - to notify 1,200 customers when their deal expired - had denied them the opportunity to shop around for a better package.

Some were even rolled over onto more expensive standard tariff rates.

British Gas Business has now pledged to help firms reduce their bills

The regulator's enforcement partner, Sarah Harrison, said: "The ability for consumers to switch easily and fairly is key to a well-functioning energy market.

"In these cases British Gas Business failed these consumers who were wrongly blocked from switching, many of them small businesses, and denied others the chance to switch to a better deal at the end of their contract.

"British Gas Business fully accepts its failings, has stopped the practices and corrected its processes to prevent this happening again.

"The company has taken responsibility for its actions and this package strikes a balance of penalty for the company and redress for affected consumers."

Ofgem said British Gas Business cooperated fully throughout its inquiry, which began in 2012, and that was reflected in the level of the settlement package which would have been much higher had that not been the case.

Stephen Beynon, managing director of British Gas Business, responded: "We're sorry these errors occurred and have worked swiftly to change our computer systems and processes, putting controls in place to stop this happening again.

"We take any failure to meet our obligations very seriously and will ensure that the new energy efficiency fund we have set up will be a real help to hundreds of small businesses.

"It will provide free expert advice and energy efficiency measures, such as new boilers, lighting and renewable energy, to help firms to manage their energy consumption and bills over the long term."

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