Energy provider Utilita is to pay £560,000 to customers and to a charity after regulator Ofgem found it blocked 40,000 households from switching to other suppliers.
Between June 2010 and May 2015, Utilita wrongly stopped customers from switching to another provider, including by blocking those on fixed term contracts from leaving. Join MoneySavingExpert.com's Cheap Energy Club to see if you can save by switching.
Ofgem also found the supplier, which currently has around 260,000 users, failed to write to customers to explain why their switch had been blocked and what action they could take to resolve any issues.
As a result of its "unacceptable" behaviour, the predominantly pre-payment gas and electricity supplier is to pay £450,000 to debt advice charity StepChange, and £110,000 to customers who lost out financially when they were prevented from switching.
Ofgem says Utilita has now changed its practices.
Get Our Free Money Tips Email!
How do I know if I'm affected?
Ofgem says Utilita will contact the 40,000 affected customers in a month's time to let them know what's happened. This includes both former and existing users.
However, Utilita says "'less than 10% of affected customers were left out of pocket" and that it will only refund these particular people. Ofgem, on the other hand, says around 7,700 customers have been flagged as losing out financially and are therefore due a payment.
If you don't hear from Utilita but think you're affected, contact Utilita.
How will I be paid any money owed?
As 99% of Utilita's customers have pre-pay smart meters, Ofgem says affected customers are likely to receive PayPoint cash vouchers or have any money owed paid directly into bank accounts. For those who've since left, Utilita says they'll receive either a cheque or bank transfer. Ofgem says letters sent out will give exact details about the refund process.
Any affected customers who haven't been identified within three months will have their share given to StepChange.
Utilita hasn't confirmed how much people will get back, it just says the exact amount depends on the individual's circumstances. But if 7,700 people are due a refund as Ofgem has predicted, it means an average repayment of £14.
'Utilita's prolonged failure to allow many customers to switch was unacceptable'
Anthony Pygram, Ofgem's senior partner with responsibility for enforcement, says: "The ability to switch suppliers is important for customers and fundamental to a well-functioning energy market.
"Utilita's prolonged failure to allow many customers to switch was unacceptable. Utilita acknowledges its failure and is rightly looking to refund customers left out of pocket."
'Utilita would like to apologise unreservedly'
A Utilita spokesperson says: "Utilita would like to apologise unreservedly to those customers whom we wrongly prevented from switching supplier.
"Our customers are vitally important to us and we have taken quick and decisive action to update and improve our switching procedures. None of the issues investigated remain a problem and all our transfer processes are now compliant.
"The learnings we take from this process will benefit all our customers in the future."