Big six supplier British Gas has agreed to pay £9.5 million to compensate customers for substandard treatment.
The settlement follows an extensive investigation by Ofgem of British Gas license breaches with regards to customer service and billing. The breaches all took place between March 2014 and December 2015.
The £9.5m redress package will mostly go to microbusiness customers after British Gas failed to comply with its obligation to treat microbusiness customers fairly, and failed to display contract end dates on microbusiness bills.
Some of the money will be donated to Money Advice trust.
Revealing the multi-million-pound settlement, Ofgem explained that it would also issue a £1 penalty to British Gas.
The regulator said: “The Authority considers that these consumer redress payments will be of greater benefit to business energy consumers than if a significant financial penalty were to be imposed… If BG had not agreed to settle this investigation by making these payments, the Authority would have considered it appropriate to impose a much larger penalty in view of the seriousness of the contraventions.”
In addition to the microbusiness failings, Ofgem found that British Gas failed to comply with its obligations to “take all reasonable steps to complete a supplier transfer within 21 days” for domestic customers. It also fell short of requirements on frequency of billing and on complaints handling.
British Gas’s license breaches largely arose because of a new billing system, Ofgem explained. The regulator assured that “all of BG’s breaches have now ceased”.
It also acknowledged that: “BG expended significant costs to resolve issues with its new billing system, increased its staff resources in order to clear its backlog of customer complaints and also provided compensation to some of the affected customers.”
Ofgem said British Gas is now “delivering a significantly improved billing performance compared to under its old systems”.