BES to pay £980,000 for failures in customer service following Ofgem investigation
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Related information
- BES failed to properly explain important contract terms to its customers.
- Supplier’s complaints handling processes were inadequate and it wrongly blocked some customers from switching supplier.
- Over £300,000 will be returned to customers, £670,000 will go to benefit consumers through Business Debtline.
- BES has now improved its processes.
Business energy supplier, BES, will pay £980,000 for customer service failures between June 2010 and July 2015. BES will return around £310,000 to directly affected customers. The remaining £670,000 will be paid to Business Debtline.
Ofgem found that BES failed to fully explain important details of customers’ contracts. The supplier failed to explain possible termination fees to customers if they ended their contract early, to properly explain price reviews during their contract, and that they faced increased standing charges for not using a minimum amount of energy.
Since the majority of BES’ customers signed up to four or five year contracts, these omissions were particularly serious. BES has agreed to repay termination fees and any standing charges to affected customers. BES will also get in touch with customers who have previously contacted them about their contracts and will allow them the option to end their contracts without paying termination fees.
In some cases, BES wrongly blocked customers on deemed contracts* from switching supplier. These customers were not able to switch to their preferred supplier and therefore paid higher prices for their energy. BES has agreed to compensate affected customers. BES was also found to have inadequate processes and procedures to handle the complaints it received.
The supplier has since improved its processes and has cooperated throughout the investigation.
Anthony Pygram, Ofgem senior partner in charge of enforcement, said: “BES failed to treat its customers fairly and did not provide them with key information when signing up for contracts.
“BES’ customers were unable to make fully informed choices about their energy supply and many were signed up to four or five year contracts without realistic ways to exit. This was unacceptable, and is why the supplier has agreed to pay £980,000 to compensate customers directly affected and to benefit consumers through Business Debtline.”
Notes to editors
BES is a micro-business energy supplier. Ofgem opened the investigation in October 2014 following a referral from Citizens Advice prompted by a disproportionately high number of complaints about BES.
2. Deemed contracts
*A deemed contract is normally in place when any type of customer moves into new premises and starts to consume gas, electricity, or both, without agreeing a contract with a supplier.
Around 10% of micro-businesses are on deemed contracts. It’s vital that they are aware that prices on these contracts are on average 80% more than rates charged in a negotiated contract. If you are on a deemed contract you should shop around and compare supplier offers for a new energy contract, as you could make significant savings.
About Ofgem
Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.
For facts, figures and information about Ofgem’s work, see Energy facts and figures.
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