British Gas and other energy companies will be ordered to remove prepayment meters that were unfairly force-fitted at the homes of vulnerable customers, the Ofgem chief executive has said.
Jonathan Brearley also confirmed that the firms involved were “highly likely” to pay compensation to customers over the scandal and that companies found to have systematically broken rules would be fined.
Brearley was questioned on BBC Radio 4’s Today about the regulator’s handling of the crisis after an investigation by The Times this month.
An undercover reporter found that British Gas was routinely breaking into customers’ homes to force-fit the pay-as-you-go meters, even when they were known to have extreme vulnerabilities. If families cannot afford to top up these meters, they are cut off from their supply.
Asked about how this had been allowed to happen before being exposed by The Times, Brearley said: “Clearly, something has gone wrong in British Gas.”
Referring to existing Ofgem rules that are meant to protect vulnerable people, he added: “If we find that those rules haven’t been followed, those companies will be forced to make redress. And that is highly likely to mean they will have to put that meter right, they will have to pay compensation and, if it’s systematic, there will be fines for those companies.”
He said energy suppliers should not wait for the regulator’s investigations to conclude, but should immediately start work proactively to check if they had wrongly installed prepayment meters and, where appropriate, replace the meter and offer compensation.
The undercover investigation found that families forced on to prepayment meters last month — despite freezing temperatures and rocketing energy prices — included a single father with three children. Others targeted included a woman in her fifties known to have severe mental health problems and the mother of a four-week-old baby.
Debt collection agents working on behalf of British Gas and other suppliers were incentivised with bonuses when they forcibly installed the meters.
Ofgem is reviewing its rules for suppliers, which currently state that they should only ever force-fit prepayment meters as a last resort, and this should never happen when customers are “in very vulnerable situations”.
The firms could face much stricter and more specific long-term restrictions on the use of prepayment meters.
After the publication of The Times’s findings, the force-fitting of prepayment meters was suspended until at least the end of next month. Ofgem also issued a legal order banning British Gas from force-fitting the meters until it can prove it is complying with all its legal obligations.
The regulator has now set out plans for its “comprehensive, independent and wide-ranging” investigation into practices at British Gas, which includes assessing whether it has breached licence conditions and if it has taken all required steps to support customers in debt before installing a prepayment meter, including ensuring its debt collection agents have been acting appropriately.
Firms apply to magistrates’ courts for warrants to install the meters when customers cannot pay their bills and last year there was a surge in applications.
Lord Justice Edis, one of the country’s most senior judges, has ordered courts to stop listing the hearings “until further notice”.
Brearley told Today: “Following the Times investigation, we said to the industry we simply cannot continue in the way we are now . . . The Times investigation uncovered behaviour that, on the face of it, without prejudicing our investigation, seems unacceptable.”
He said it was “incredibly distressing” for families who could not currently afford to pay energy bills, adding “those families need to be treated with compassion and professionalism”.
Grant Shapps, the energy secretary, has written to energy suppliers to ask for updates on their plans to compensate customers over the prepayment meter scandal. He has said he was disappointed at the initial responses from many of the firms.
Centrica, which owns British Gas, has apologised for its agents’ conduct. It suspended the practice of forcibly installing meters under warrants after an approach by The Times before the publication of its investigation.
A spokeswoman said protecting vulnerable customers was “an absolute priority” and that it had only used warrants as a last resort.
This article was amended on February 22, 2023, to make clear that only meters that unfairly force-fitted will be required to be removed.