British Gas agreed to pay £1 million in compensation yesterday following the latest mis-selling scandal to hit the energy sector.
Ofgem yesterday praised the Centrica-owned firm after it reported itself to the watchdog when the mis-selling issue was uncovered in April last year and moved immediately to modify its practices.
The problems related to energy supply deals offered to customers in Sainsbury’s stores nationwide and at a shopping centre in London between February 2011 and March last year.
Ofgem said employees offering the switch deals did not make clear that British Gas was the supply partner for Sainsbury’s Energy.
Associated branding in Sainsbury’s stores also did not make the link.
The regulator said sales staff had also failed to compare tariffs on a like-for-like basis, with inaccurate savings estimates being thrown up by monthly direct debit plans being set against quarterly payment methods.
Ofgem said that, in some cases, customers were told they would save money by switching but actually paid more with Sainsbury’s Energy or British Gas than if they had remained with their current supplier.
British Gas said it discovered the mistakes through its own internal checks and added that it informed Ofgem of what had happened before taking steps to compensate customers.
Ian Peters, managing director of British Gas Residential, said: “We are very sorry and have ensured no customer will be out of pocket as a result.”
All customers due a compensation payment have already received it as a credit on their account, and a further £434,000 has been diverted to the British Gas Energy Trust to provide assistance to vulnerable customers.
As British Gas reported the matter to Ofgem and took action to correct the issues, the watchdog said it has accepted the compensation package in lieu of opening a formal investigation.
“Ofgem welcomes British Gas’s action to tackle its sales failures and compensate customers quickly when it became aware of mis-selling,” said Sarah Harrison, Ofgem’s senior partner in charge of enforcement.
“Ofgem expects all suppliers to put this poor behaviour behind them and really start acting in a way that will help consumers trust energy suppliers. Where they don’t, Ofgem will act.”
Since 2010, Ofgem has imposed £100m in fines and redress on energy companies for various rule breaches, including around £40m for mis-selling.