Ofgem fines British Gas £4.25m after IT errors block businesses from switching

Ofgem has found that a computer system error caused British Gas to incorrectly stop its business customers from switching to other suppliers, resulting in a penalty of £4.25 million for the energy provider.

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Ofgem has found that a computer system error caused British Gas to incorrectly stop its business customers from switching to other suppliers, resulting in a penalty of £4.25 million for the energy provider.

Between 2007 and 2012, around 5.6 percent of the objections made by British Gas Business to its non-domestic customers wanting to switch suppliers were invalid, industry regulator Ofgem found.

“This was caused by errors in British Gas Business’s computer systems, and there being inadequate processes and controls in place to detect when objections to switches were invalid,” Ofgem said.

British Gas also failed to properly communicate to customers the reasons for the switching block and how customers could resolve it.

Ofgem said that British Gas fixed the issues “swiftly” after the regulator opened the investigation in 2012. However, the energy provider has been required to pay an £800,000 penalty and pay £3.45 million into an Energy Efficiency Fund for to help micro-business customers reduce their energy bills.

Stephen Beynon, managing director of British Gas Business, said: “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.”

In another investigation, Ofgem found that British Gas failed to give notice to around 1,200 business customers that their tariff was due to expire, which meant that they were not given the opportunity to shop around for a better deal. Instead, they were continued on the same terms or rolled over onto more expensive standard tariff rates.

British Gas Business has paid back £1.3 million in compensation to all current customers affected by this, and is in the process of paying back £150,000 to customers who have moved on.

Sarah Harrison, Ofgem Senior Partner in charge of enforcement, 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.”