British Gas blunder leads to £1.7m customer payout

The UK’s largest energy supplier has promised to compensate a quarter of a million of its prepayment customers after failing to sufficiently inform them of a change in their top-up payment provider last year.

The switch from PayPoint to Payzone came into effect on 1 January 2020, though around 270,000 customers received no communication from British Gas until late January, once it had already taken place.

Those customers who were informed prior to the move, only heard from British Gas in December 2019, leaving insufficient time for them to switch supplier if they were unhappy with the new arrangement.

Top-up issues

The change to Payzone left some unable to afford to top-up their meters, with the minimum charge increasing from £1 to £5 - though this decision has since been reversed following customer backlash.

Many prepayment customers also had issues topping up at their usual local newsagent or supermarket, with only 24,500 Payzone locations across the country, compared to PayPoint’s 39,500.

At the time, PayPoint CEO Patrick Headon said of the switch: “After a long and mutually beneficial partnership, it is disappointing for PayPoint and British Gas customers that we have been unable to agree a renewal of our contract.”

This was certainly echoed by the thousands of customers left in the dark about the change to their prepayment arrangement.

How much will British Gas pay out?

British Gas has now paid out £1.48 million in compensation to affected customers and also said it will put £250,000 into the voluntary energy redress fund, a scheme that aims to support vulnerable customers and the development of innovative energy products and services.

Following the British Gas payout, industry watchdog Ofgem has said it will not be taking any formal action against the supplier, though it did criticise how British Gas dealt with the change.

Ofgem retail director, Philippa Pickford, said, “When such a fundamental change is being made, such as where meters can be topped up, energy suppliers need to communicate with their customers in plenty of time.

“British Gas should have informed all of their prepayment customers, many of whom are in vulnerable situations, of the change to how to top-up their meters during the winter period.

"Some customers were unaware of the change before it happened and may have struggled to contact British Gas as they opted not to open their general enquiries line on the go-live date. Others were given insufficient time to make alternative arrangements if they were unhappy with the change of top-up provider.

"Ofgem will continue to closely monitor the market to ensure that all customers are protected and treated fairly by their supplier."

What does British Gas say?

A spokesperson for British Gas said: "We chose to move our prepayment top-up service to Payzone, as we believe they offer the best and most flexible service for our customers, and will add more outlets where our customers need them.

“We recognise that this transition was not as smooth as it should have been, and we would like to apologise again to any customer impacted.

"We respect Ofgem's decision and will be paying an additional £250,000 to the voluntary redress fund. We have already paid £1.48 million in compensation to our prepayment customers who were negatively impacted by this change.

"We know that some prepayment customers are vulnerable and we take our responsibilities to them very seriously. We ensured that anyone who contacted us had heating and hot water – this included sending an engineer to manually add credit to the meter if the customer was unable to get to their nearest working top-up point."