Energy firms have been forced to fork out £389million in fines and redress payments over the last 10 years, new research has revealed.
British Gas has been charged the most over the past decade, paying out £45.5million, according to analysis of Ofgem data by energy switching site, Flipper.
The Big Six are most at fault with Npower coming in next with a bill of £36million followed by Eon at £34.6million.
When tallied up, energy firms have had to pay back the equivalent of £100,000 a day, every day, for the last 10 years due to non-compliance with regulations.
Energy firms have paid out £389m in fines and redress payments over the last 10 years
Mark Gutteridge, managing director of Flipper, said: ‘This figure is shocking and these are not minor issues.
‘Ofgem only investigate where it believes a company has breached their licence conditions, consumer protection law or have acted anti-competitively.’
While the fines are paid to the Treasury, the vast majority of this sum – 75 per cent – have been redress payments.
This means the energy company agreed to take action that benefits customers such as paying into social programmes like the Warm Home Discount.
Problems seem to be escalating as the latest statistics from Ofgem suggest that 2020 could be a record year for fines.
The total fines and redress payments for the Big Six:
British Gas: £45.5million
Scottish Power: £29.7million
So far, £64.9million has already been dished out this year – the second biggest amount after £71.9million was paid in 2015.
More than 20 different suppliers have been fined since 2010, with British Gas and Eon each having paid out the most at more than £34million each.
British Gas’ most recent charge was in August 2018 for switching practices, being told by Ofgem to pay £1.7million in redress.
Among the issues included wrongly charging customers exit fees, automatically switching customers onto more expensive standard tariffs, and wrongly informing others about the possibility of exit fees.
This is Money approached British Gas but it said it had no comment.
The most recent charge out of all the fines and redress payments was from challenger supplier, Utilita, who had to pay out £500,000 after it was found to be overcharging its customers.
British Gas has been charged the most over the past decade, paying out £45.5million
Mis-selling was the number one reason generating the biggest total charges, totalling £40.5million.
Complaints handling was next at £37.3million whilst incorrect billing and overcharging came in at £25.7million.
Switching practices saw charges total £10.5million.
Gutteridge added: ‘It’s outrageous the scale to which energy companies have misled customers into switching to a new deal, overcharged them for the energy used and how badly complaints have been managed.
‘These charges represent thousands of people getting poor service, spending hours on the phone – often on hold – or writing dozens of letters to try and resolve their problem.’
Whilst some of the biggest charges were to firms that aren’t retail suppliers, these issues still impacted customers bills.
For example, Intergen, which owns gas-fired power plants in the UK, was charged £37million earlier this year for submitting misleading Physical Notifications which led to the manipulation of the market from which InterGen derived profits by pushing the price paid for energy up.
Cadent, a gas distribution network, was also charged £37.4million in May of last year for interruptions to services and the failure to make compensation payments.
However, the biggest charge for an energy supplier was to Npower in January 2016 when the Big Six firm paid out £26million for its failure to handle complaints effectively within a reasonable timeframe.
For those looking to complain about their energy firm, they should first speak to their supplier.
Your energy supplier should write to you at eight weeks or ‘deadlock’ – if neither of you can reach agreement – to tell you how to do this.
After this, you can take the issue to the Energy Ombudsman which will aim to resolve the dispute.
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