British Gas pays out £1m for mis-selling

British Gas faces a £1 million penalty for mis-selling to customers in Sainsbury’s stores and Westfield shopping centre.

The supplier has paid £566,000 direct compensation to affected customers and a further £434,000 to help vulnerable customers via the British Gas Energy Trust.

Ofgem said the supplier’s staff made exaggerated savings claims to prospective customers between February 2011 and March 2013. Sales staff did not compare tariffs on a like for like basis, comparing monthly direct debit with quarterly payment methods to produce inaccurate savings estimates.

In some cases, customers were told that they would save money by switching, but in fact they paid more with Sainsbury’s Energy or British Gas than they would have paid if they had remained with their current supplier.

British Gas has made direct payments of an average £130 to customers it has identified who were potentially mis-sold. It was unable to contact around 1,300 ex-customers and this compensation is part of the £434,000 that will go to directly benefit customers via the British Gas Energy Trust.

Ofgem’s senior partner in charge of enforcement, Sarah Harrison, said: “Ofgem welcomes British Gas’ action to tackle its sales failures and compensate customers quickly when it became aware of mis-selling.

“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.”

British Gas became aware of this issue and reported it to Ofgem in April 2013. It took immediate action to correct the issues. Given British Gas’ prompt action, Ofgem has decided to accept this consumer package instead of opening a formal investigation.

British Gas has been the only one of the Big Six suppliers to escape a multi-million pound penalty for doorstep mis-selling, with Eon facing the largest payout, of £12m, in May.