British Gas pays out after mis-selling Sainsbury's Energy deals

The energy giant has admitted it exaggerated savings claims to prospective customers in Sainsbury's stores nationwide and at Westfield shopping centre in Shepherd's Bush between February 2011 and March 2013. (Join our free Cheap Energy Club to find the best deal.)

It has since re-calculated quotes of and paid out £566,000 in compensation to 4,300 affected customers – an average payment of £130 each. A further £434,000 has also been set aside to help vulnerable customers via the British Gas Energy Trust.

However the firm says 1,300 customers who have since left British Gas have not been refunded. If you think this might be you, contact British Gas' customer services team and if you are one of those affected, you'll be refunded.

British Gas discovered the errors after carrying out internal checks. It reported the issue to Ofgem in April 2013 and says it took steps to resolve the issue straight away. Ofgem says it will not open a formal investigation as British Gas acted quickly and agreed the compensation payouts.

The firm's failings are as follows:

• Staff and branding failed to make it clear that British Gas was the supply partner for Sainsbury's Energy.

• Sales staff didn't compare tariffs on a like-for-like basis.

• Monthly direct debits were compared with quarterly payment methods, which meant savings estimates were wrong.

• In some cases customers were told they could save money by switching, but they actually paid more through Sainsbury's Energy or British Gas than if they had stuck with their original provider.

'Yet another mis-selling penalty'

MoneySavingExpert.com's energy analyst Archna Luthra says: "Yet another mis-selling penalty for one of the big six energy firms. Let's hope this is the last fine Ofgem has to dole out for inadmissible, systematic mis-selling. "If you think you might have been mis-sold to, get in touch with British Gas with any information you have – you may be able to get £100s back. "And remember, switching directly with a supplier is almost never the best way. Instead, do a full market comparison, which looks at all providers and factors in your usage and postcode."

Sarah Harrison, senior partner in charge of enforcement at Ofgem, says: "Ofgem welcomes British Gas's action to tackle its sales failures and compensate customers quickly when it became aware of mis-selling.

"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."

What does British Gas say?

Ian Peters, managing director of British Gas Residential, says: "We are very sorry and have ensured no customer will be out of pocket as a result. We're pleased that Ofgem recognises the actions we have taken to ensure the right outcome for our customers.

"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."