Payout deal over exaggerated claim

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British Gas has agreed a £1 million compensation package after it was found to have e xaggerated savings claims it made to prospective customers.

In the latest controversy to hit the industry, British Gas admitted it had mis-sold to customers in Sainsbury’s stores nationwide and in the Westfield shopping centre, Shepherd’s Bush between February 2011 and March last year.

It has identified customers who were potentially mis-sold to and has made an average payment of £130 to 4,300 affected customers. As it was unable to contact another 1,300 ex-customers, a further £434,000 will benefit vulnerable customers via the British Gas Energy Trust.

Regulator Ofgem said staff and branding in Sainsbury’s stores did not make clear that British Gas was the supply partner for Sainsbury’s Energy.

It added that 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.

And in some cases, customers were told that they would save money by switching, but 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 said it discovered the mistakes through its own internal checks and added that it informed Ofgem of what had happened before taking steps to compensate customers.

Ian Peters, managing director of British Gas Residential, said: “We are very sorry and have ensured no customer will be out of pocket as a result.

“We pride ourselves on our high standards and it is extremely disappointing when even a relatively small number of customers don’t receive the service they expect from us.”

He said all customers due a compensation payment have already received it as a credit on their account.

Since 2010, Ofgem has imposed £100 million in fines and redress on energy companies for various rule breaches, including around £40 million for misselling.

In May, E.ON said it would pay £12 million to vulnerable customers due to poor sales practices, which lasted between June 2010 and December 2013.

Sarah Harrison, Ofgem’s senior partner in charge of enforcement, said: “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.”

As British Gas reported the matter to Ofgem and took action to correct the issues, Ofgem said it has accepted the compensation package in lieu of opening a formal investigation.

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