British Gas Agrees £20m Redress Fund in Ofgem Prepayment Meter Case

British Gas has agreed to pay £20m into a redress fund to settle an Ofgem investigation into its handling of prepayment meter installations. The complete settlement package will cost the company up to £112m in payments, compensation and writing off customers' debt.

Ofgem found British Gas failed to meet the standards required when installing prepayment meters and breached licence conditions aimed at protecting customers in vulnerable situations.

Debt agents working for British Gas broke into the homes of vulnerable customers to fit the meters. The scandal emerged three years ago. In 2023 The Times revealed that agents working for Arvato Financial Solutions on behalf of British Gas forced their way into the home of a single father of three to install a prepayment meter.

Some 40,000 customers had a prepayment meter installed without permission between 2022 and 2023. On and Scottish Power have already agreed to pay compensation. Ofgem banned the practice of fitting prepayment meters without customers' permission in high-risk households.

British Gas was first made aware of the issue in 2018 through an external review. The problem was again flagged in an internal audit in 2021. The company did not suspend the practice until 2023. Tim Jarvis, the boss of Ofgem, said the company fell short in its treatment of an unacceptable number of vulnerable customers who had a PPM installed without consent.

"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," he added. Suppliers have to go to court to get a warrant to install a meter without consent. Once suppliers have a warrant they then have to follow Ofgem rules which include a welfare check.

Customers who are due compensation would be contacted and do not need to take any action. Ofgem did not say how many people would be eligible for a payout. " He added that when the problems emerged the company stopped the activity immediately and took rapid action to improve processes and change how it engages with customers in debt, particularly those in vulnerable situations.

"Over the last three years British Gas has treated this matter with the seriousness it deserves and has made changes to practices and put safeguards in place," O'Shea said. The settlement includes compensation for customers who had a meter fitted between 2018 and 2021, on top of compensation paid for those affected between 2022 and 2023.

4m voluntary support package for prepayment customers launched by British Gas in 2023.

The settlement further includes the creation of a Vulnerable Customers Debt Advisory Panel within British Gas. Simon Francis, coordinator of the End Fuel Poverty Coalition, said the results of the Ofgem investigation were "truly shocking". He said they have confirmed that British Gas knew about these failings as far back as 2018, was warned again in 2021, and still did not take adequate action.