British Gas to pay £70 million in compensation and debt write-offs to customers forced onto prepayment meters – check if you're affected

Ofgem introduced new rules on prepayment meter installations after a 2023 investigation revealed how some debt collectors working on behalf of British Gas were allegedly breaking into people's homes to install prepayment meters while ignoring signs of extreme vulnerabilities. Prepayment meter users pay for their gas and electricity in advance.

In its conclusion to its investigation into this issue, the regulator found British Gas "failed to meet the standards required of an energy supplier" when installing prepayment meters between 2018 and 2021, breaching rules which were "specifically designed to protect customers in vulnerable situations". British Gas has already compensated affected customers for the 2022 to 2023 period.

British Gas will pay out millions as a result of its failures

Ofgem has confirmed that British Gas will:

• Put aside £70 million to write off energy debts and pay compensation to vulnerable affected customers. We've asked for further details on how the debt write-offs will work and we will update this story if we find out more. You can read more on the compensation payouts below.
  
  This £70 million is on top of the £22.4 million in compensation British Gas had already agreed to pay to those affected by prepayment meter practices in 2022 and 2023.

• Pay £20 million into the regulator's redress fund. Money in this fund is then distributed to energy-related projects in England, Scotland and Wales and to consumers via charities and consumer groups.

• Form a 'Vulnerable Customers Debt Advisory Panel'. This is designed to help British Gas "develop industry-leading practices in the treatment of vulnerable customers in debt".

British Gas will reach out if you're due compensation

Ofgem says affected customers don't need to do anything. It's given British Gas until 30 June 2027 to contact and pay all affected customers, though you're likely to have any compensation credited in the coming weeks and months.

Compensation is expected to be paid to 1,000s of people. If you believe you are due compensation or a debt write-off and don't hear anything, you can contact British Gas.

If you're no longer a British Gas customer, or if you have a traditional prepayment meter (as opposed to a smart prepayment meter), the supplier says it will send a cheque instead. We've asked if British Gas will trace people who no longer live at the same address, but again, if you think you're affected and haven't heard anything – get in touch with British Gas.

How much compensation you get will vary

British Gas says the amount you'll receive will depend on your individual situation.

However, it confirmed it will follow the compensation model outlined here, which eight other firms followed when they were ordered to pay compensation for the same issue last year:

Unhappy with your prepayment meter? Check if you can remove it

British Gas says it's reviewing customer cases from 2018 to 2021 to see whether exchanging prepayment meters for standard meters is "appropriate". It adds that it's already offered to exchange meters for some who had prepayment meters forcibly installed between 2022 and 2023.

If you currently have a prepayment meter and would like to switch off it, check your options with British Gas directly.

If you're unhappy with how you've been treated, you can complain to your supplier. If you're unhappy with your supplier's response, you can escalate your complaint to the Energy Ombudsman.

Before British Gas can restart involuntary prepayment meter installations, Ofgem says it will need to meet strict criteria and that it will continue to monitor all activity closely.

Eight other firms were ordered to pay compensation last year

Eight other energy suppliers – Ecotricity, EDF, E.on Next, Good Energy, Octopus, Scottish Power, Tru Energy and Utility Warehouse – were ordered by Ofgem to pay 40,000 customers a combined £5.6 million in compensation and £13 million in debt write-offs in May last year.

Ofgem had similarly found that some of these providers' processes "fell short of required standards" at the height of the energy crisis, when thousands of households were struggling to keep on top of their energy bills.

Compensation was distributed in a similar way, and firms were required to offer households the chance to move off their prepayment meter if they shouldn't have had one installed.

Forcible prepayment meter installations banned for some

In April 2023, Ofgem permanently banned all energy suppliers from fitting prepayment meters into the homes of over-85s and those with chronic illnesses under a new voluntary code of practice.

The regulator later extended this code in November 2023 to cover more households, as well as turning the code into mandatory rules for all suppliers. It means energy suppliers cannot fit prepayment meters into homes with an occupant:

• Over 75 years old when there is no other support in the house.

• Under two years old.

• In need of a continuous supply of energy for health reasons. This includes dependency on ventilators, refrigerated medication or people with severe health issues, such as emphysema or chronic bronchitis.

• Suffering from chronic or terminal illnesses, such as cancer, cardiovascular or respiratory disease or organ failure.

• Incapable of topping up the meter due to physical or mental incapacity.

The rules also state that vulnerability and affordability assessments must be carried out before force-fitting a prepayment meter for certain homes, including households with children under five-years-old and those that are temporarily considered vulnerable due to being pregnant or bereaved. Read the full rules in our Energy bill help guide.