Ofgem closes compliance case with British Gas, regarding its handling of changes to prepayment meter customer top-up arrangements. British Gas makes payments totalling £1.73m

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Supply and Retail Market

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Ofgem takes compliance action over British Gas’s handling of changes to how prepayment meter customers top up

Ofgem has closed compliance engagement with British Gas over a number of non-compliance issues relating to its handling of a change in Prepayment Meter Top-up vendor from Paypoint to Payzone / Post Office. The change went live on 1 January 2020 and impacted 1.8 million customers. The issues were as follows:

  • British Gas failed to directly inform ca. 270K customers (many of them vulnerable) of the change to top up provider. This meant that some customers may have suffered detriment through wasted journeys or in some cases going off supply. British Gas ultimately sent communications to these customers between 23-29 January 2020.
  • British Gas informed most of its customers of the change in top-up provider between 4-18 December 2019. The communication contained details not only of the change to vendor but also of the change in minimum vend from £1 to £5. The go-live date for these changes was 1 January 2020. This left insufficient time for customers to switch supplier if they found the new arrangements to be problematic.
  • The content of the direct communications informing customers of the change of top-up vendor did not include a contact telephone number but instead contained links to the internet. Those customers unfamiliar with, or without access to, the internet may have struggled to contact British Gas in the event that they were struggling to top-up. Additionally, British Gas chose not to operate its general enquiries line on 1 January 2020 – the go-live date.

Ofgem considers that when British Gas decided to change from using Paypoint as top up vendor, and instead appoint Payzone / Post Office, it failed to make sure that communication with its customers was adequate both in terms of coverage and content. These failures in communication with its customers (many of them vulnerable) may have led to detriment through wasted journeys and in some cases customers going off-supply.

Ofgem engaged with British Gas early in January 2020 when we became aware of problems with the transition. We asked for information relating to the case and as part of that request, British Gas told us that they proposed to make payments of ca. £1.48m to impacted customers. In total British Gas have made payments to their customers of £1,478,070 with a small amount (£2,435) still left to pay.

In addition, British Gas has agreed to make a payment of £250,000 to the voluntary redress fund, in recognition of its failings.

Key lessons learned

  • On occasions, suppliers choose to make significant changes to their operational arrangements. These changes can impact large numbers of customers and it is important the suppliers communicate the changes to all of those customers accurately, clearly, in good time and making sure that they are easy to contact should a customer wish to discuss the change with them.
  • When communicating about a significant change to operational arrangements it is important that all customers impacted by that change receive information that is pertinent to the change. Some customers choose to opt out from receiving marketing information from supply companies; we expect companies to have robust processes in place to ensure that these customers continue to receive information that is pertinent to their supply and any changes that affect them.
  • We understand that changes to operational arrangements will not suit all customers and that some customers may choose to change supplier rather than accommodate the proposed change. Customers should receive communications in enough time to enable them to switch supplier before the change is implemented.
  • When communicating with a large cohort of customers it is important to ensure that the content is appropriate for all of those customers. In particular, recognising the fact that customers may want to contact the supplier via different media to discuss the change. The supplier is best placed to know how its customers like to contact them and it is for the supplier to determine a strategy which works for all of their customers.

Further detail on each area

Direct Communication with customers

British Gas undertook to inform all customers that would be impacted by the transition to Payzone / Post Office in advance of the change. British Gas sent communications to customers between 4 and 18 December 2019 by their preferred media. When reviewing their communications with customers after the event, British Gas realised that ca. 270K customers had not been sent direct communications about the change and therefore may not have been aware of the new arrangements on 1 January 2020. This may have led to customer detriment through wasted journeys and, very probably, led to some customers going off supply because they were unable to top up. The failure in communication was mainly due to the fact that a cohort of customers had deselected themselves from receiving marketing communications and were erroneously deselected from receiving communications relating to the change of top up provider by British Gas. It took British Gas some time to correct this error and communications were only sent out to these customers between 23 and 29 January 2020. Ofgem considered that British Gas should have been alive to this risk and mitigated accordingly. We were concerned that a large cohort of customers (many vulnerable) that had deselected themselves from marketing communications were disadvantaged by not receiving vital communications about changes to British Gas’s operational arrangements. We considered that communication of these changes was relevant to maintaining a secure supply of energy during the coldest time of year.

Timing of the communications

British Gas sent out communications to most impacted customers between 4 and 18 December 2019. The communications included details of not only the switch to Payzone as a top up vendor but also the decision to increase the minimum vend from £1 to £5 from 1 January 2020. Ofgem notes that the increase in minimum vend to £5 aligns with many other supply companies and is not a compliance issue per se. However, the change in minimum vend to £5 may have been difficult for some customers, especially those who regularly topped up less than £5 at a time, and they were not left enough time to switch to another supplier. British Gas should have started the process to communicate with its customers earlier to ensure customers had adequate time to switch to another supplier if the change to minimum vend, or indeed the change to prepayment meter top up provider, was problematic for them.

Content of Communications and support on 1 January 2020

The communications to customers did not include a contact telephone number, only internet links and a link to an interactive map to find the nearest Payzone / Post Office terminal. In addition, the British Gas general enquiries line was not open on 1 January 2020 and only the emergency line was available. Ofgem considered that this may have made it difficult for customers that do not have access to the internet, or are unfamiliar with the internet, to contact British Gas if they were struggling to make a top up payment on that date.