British Gas has agreed to a £20m payout and a major debt write-off scheme after an investigation found it had wrongly installed prepayment meters in the homes of vulnerable customers without consent. Regulator Ofgem said the supplier will compensate those affected between 2018 and 2021, in addition to payments already made to customers impacted during 2022 and 2023. Those eligible will be contacted directly and do not need to take action. Around £70m of energy debt will also be written off as part of the redress package.
The watchdog described its investigation into the company’s practices over a five-year period as one of the most complex in its history. It found serious failings in how British Gas handled customers in financial difficulty, particularly those considered vulnerable.
Ofgem's Statement
Tim Jarvis, chief executive of Ofgem, said: “It is clear that British Gas fell short in its treatment of an unacceptable number of vulnerable customers who had a prepayment meter installed without consent and it’s right that they’ve taken action to put things right. Because of our action, customers will receive a substantial package of redress, compensation and debt write off.” He added: “The installation of prepayment meters under warrant should only be a last resort, with rigorous checks to ensure debt is recovered lawfully, proportionately and safely.” Smart pay-as-you-go meters were a 'positive choice for many customers' instead, according to Jarvis.
Background of the Scandal
The scandal first came to light in early 2023 during the height of the cost of living crisis, when an undercover investigation revealed that debt agents working on behalf of British Gas had entered homes - including those of elderly and disabled customers - to forcibly install prepayment meters. Energy firms are legally allowed to apply for a court warrant to enter a property and install a prepayment meter if a customer has significant unpaid debt, to prevent further debt accumulation. However, strict rules prohibit the practice where customers are considered vulnerable - including those with serious health conditions, mental health issues or young children - or where it would be unsafe to manage such a meter.
British Gas Response
Following the revelations, British Gas halted the use of third-party contractors for warrant-based installations and moved the process in-house to improve oversight. The company has also said it stopped force-fitting meters entirely in February 2023 when the issue emerged. Chris O’Shea, chief executive of British Gas owner Centrica, said: “What happened should never have happened and I am sorry to the prepayment customers who were affected. When we get things wrong, we make them right. When these issues came to light in 2023, we apologised, stopped the activity immediately and took rapid action to improve our processes and change how we engage with customers in debt, particularly those in vulnerable situations. Over the last three years, we have treated this matter with the seriousness it deserves and have made changes to our practices and put safeguards in place to ensure we deliver the standards our customers have every right to expect.” Those eligible for compensation will be contacted directly and do not need to take action.
Industry-Wide Impact
The wider controversy prompted an industry-wide review, with around 40,000 customers across multiple suppliers - including EDF, E.On and Scottish Power - already receiving compensation for similar practices between 2022 and 2023. Following the scandal, Ofgem has introduced tougher rules across the industry. Suppliers must now: make at least 10 attempts to contact a customer before installing a forced meter; conduct a site assessment to ensure no high-risk vulnerable people live there; and provide £30 of credit on the new meter to prevent immediate disconnection.
While Ofgem acknowledged that suppliers must be able to recover unpaid debts, Jarvis said the system must strike the right balance. “We’ve certainly seen a very big increase in the amount of debt and arrears in the energy system. We need to get the right balance. We are working very closely with debt charities, suppliers and the Government to get the right framework in place to incentivise and encourage people to pay their bills and enable suppliers to recover their debt, while protecting the most vulnerable,” he said.
