The energy regulator is to investigate British Gas over its switching terms after MoneySavingExpert.com presented evidence showing that some customers with fixes ending were wrongly told they'd have to pay up to £60 to switch.
Ofgem is looking into whether British Gas breached the conditions of its licence relating to customers who wanted to switch to another provider.
The regulator said its probe was sparked by a MoneySavingExpert investigation which found a number of major energy firms had wrongly told customers they'd have to pay exit fees. The regulator said it's also talking to Npower and E.on separately over their exit fee policies – but it's not launched an investigation into either company.
To see if you can switch and save £100s, use our free Cheap Energy Club.
'How can you trust firms who pump out such crap?'
MoneySavingExpert.com founder Martin Lewis said: "The rules are very plain; you cannot and should not be charged exit penalties if your switchover takes place within the last 49 days of your energy fix.
"At least two firms – British Gas and Npower – have wrongly put that they would charge in their official literature. At best they are careless in the way they treat customers; at worst they are trying to bully them into staying, with misinformation.
"How can you trust firms who pump out such crap? I'm delighted that Ofgem is getting tough with them following our investigation."
What ARE the rules?
The regulator's rules on penalty-free switching are extremely clear – if you're in the last 49 days of your fixed deal, you DON'T have to pay an exit fee and can switch to a different provider penalty-free.
You can actually apply to switch at any point during a fixed-term contract without having to pay exit fees, as long as the switch is actually completed during the switching window. In practice though, it's best to apply within the switching window, as you can't set an exact date for the switch to complete and if it completes before the window opens you could still be charged exit fees.
How MSE's investigation sparked Ofgem probe
Despite the rules on penalty-free switching, at the end of 2016 and start of 2017 we found evidence that customers were being given duff info by various energy suppliers. Here's the timeline of our investigation:
- Dec 2016. We revealed British Gas and Npower had wrongly told some customers they'd have to pay exit fees of up to £60. British Gas's T&Cs for a collective fix wrongly stated customers would have to pay without mentioning the 49-day penalty-free switching rule – it said it had since "updated" its wording. Npower customers applying to switch within the last 49 days of their fix were sent confirmation emails telling them they'd have to pay exit fees – it blamed a system error and said it would change its emails.
- Jan 2017. We received fresh complaints from customers at Npower, with some still being sent emails saying they'd have to pay to switch despite leaving within the switching window. Npower blamed an "error" within its system. An E.on customer also reported being wrongly told she'd be charged when calling the provider – it apologised for what it called "an isolated incident".
- Mar 2017. MSE lodged a formal complaint with Ofgem and presented a dossier of evidence. We had further reports of Npower, British Gas and Extra Energy customers being given wrong info. Npower said it had stopped sending confirmation emails and was contacting customers who had been given the wrong information, while British Gas and Extra Energy said customers wouldn't be charged.
What happens now?
Ofgem said today it is investigating British Gas over exit fees for customers wanting to switch providers and whether the company maintained expected standards to ensure customers were treated fairly. It's not clear how long the investigation will take.
An Ofgem spokesperson said: "Energy suppliers are obliged to waive any termination fees for domestic customers wishing to switch supplier in the period of 49 days before their fixed deal comes to an end.
"We have reviewed the evidence received to date, after MoneySavingExpert raised this issue, and will be conducting a thorough investigation to establish whether British Gas failed to comply with the conditions of its licence."
Ofgem's statement added: "The opening of this investigation does not imply that we have made any findings about non-compliance."
A British Gas spokesperson said: "British Gas will co-operate fully with Ofgem to address the issues raised in today's announcement."
Ofgem also says it's talking to Npower and E.on about exit fees but is not investigating them.
An E.on spokesperson said: "As always we'll continue to work with Ofgem as appropriate." Npower declined to comment
If you've been given incorrect info about exit fees by your energy supplier or have been wrongly charged, let us know by emailing email@example.com.
How do I know when my fix ends?
You can use the search function provided by energy price comparison service UK Power to find out your tariff's end date – as well as any exit fees you may face by leaving early.
Before your energy fix expires, make sure you compare prices to see if you can save by switching – you can do this using our Cheap Energy Club. If you don't switch, standard industry practice is to automatically roll you onto your supplier's 'standard' tariff, which is likely to be much more expensive.