Financial and Business|

British Gas Given £2.5 million Fine by Ofgem

British Gas LogoBritish Gas has been hit with a £2.5 million fine from energy regulator Ofgem for poorly handling customer complaints and failing to tell customers they can appeal to the energy authority. This is one of the unprecedented number of investigations that the regulator has launched this year, totalling fines of £10 million already. It took action against British Gas in June.

In this latest action, Ofgem found that British Gas failed to reopen complaints when the customer suggested that the complaint hadn’t been resolved. The energy provider also didn’t provide customers with some key details about the redress service offered by the energy ombudsman when their complaint couldn’t be resolved. Ofgem says that the company has improved its systems now.

British Gas has dismissed the £2.5 million fine as ‘disproportionate,’ but it admitted to failing on issues related to its micro-businesses. A spokesman said that the breach was minor compared to the 16 million accounts the company serves, but they acknowledge their service fell short of what is expected – specifically for their micro-business customers. The company knew of the issues, which is why they flagged it to the regulator. They are now confident of meeting all the regulator’s requirements following an investment of £4 million.

Consumer groups have welcomed the punishment since 9 of 10 complaints to the energy regulator result in some kind of redress. Which? executive director Richard Lloyd says that energy providers should always let customers know that they can take an unresolved complaint to the energy authority. It’s well worth pursuing, as most of the complaints assessed by the Ombudsman are upheld, with 7 of 10 getting financial compensation.

The investigations are far from over. Ofgem is still looking into how RWE Npower and EDF Energy handle their complaints. These two suppliers, along with Scottish and Southern Energy and Scottish Power are also being investigated for mis-selling. On top of this, Scottish Power is caught in two other investigations – one for discrepancies between its direct debit and standard credit tariffs; and the other for potentially misleading marketing.

Ofgem senior partner Sarah Harrison says that the finding revealed this week highlights the basic failures in customer service at British Gas – especially when dealing with some customers of small businesses. The regulator warned the industry in March that they would be taking a tough approach to enforcement to back up their plans for reform in the retail market. This £2.5 million fine against the company, along with the other £10 million in fines imposed on the energy industry this year so far, send energy companies a clear message. The fines also show the regulator’s commitment to using its power to ensure that energy providers treat customers transparently and fairly.

This comes as Centrica, which operates under the names British Gas and Scottish Gas, announced that it will be raising gas and electricity prices by an average of 18% and 16% respectively. The increase will be implemented from August 18, taking some customers’ bills up as much as 25%.

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