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Utility company British Gas is expected to compensate more than 4000 customers for mis-selling because it exaggerated the savings they would make by switching to one of its tariffs.
The money will be paid out to 4,300 customers who signed up to Sainsbury’s Energy and British Gas tariffs between February 2011 and March 2013 at an average of £130 per customer. The repayment is being made because the two companies, who signed a deal to become a partnership in 2011, overstated how much customers would save on their gas and electricity bills the following year by signing up to a new tariff.
It is believed that the compensation package has been approved by Ofgem and the regulator will put out a statement about it in the coming days. However, at the time of writing Ofgem had told the Guardian that it was not liable to comment on speculation.
The mis-selling allegation is the latest in a long line of scandals to hit the UK energy market. At the end of June, Ofgem referred the power industry to the Competition and Markets Authority in one of the biggest investigations into the sector to date. The ‘big six’ providers will step into the spotlight for the next 18 months as the CMA looks into whether the companies have been making profit unfairly.
Then, earlier in June nPower was told to report to Ofgem every month to detail its progress in reducing late billing or it would risk having to scrap some of its telesales activities. The regulator has also opened an investigation into whether nPower is competently dealing with complaints, an issue which was first raised six months ago.
An insider at energy comparison site Uswitch.com said that billing issues were one of customers’ biggest gripes with one fifth of households being wrongly billed by their provider last year.