Shell Energy, a major energy and broadband provider in the UK, has been hit with a £1.4 million fine by communications regulator Ofcom for failing to comply with consumer protection rules. The company failed to alert over 70,000 phone and broadband customers about the end of their contracts and neglected to inform them about potential savings with new deals.
Ofcom’s rules, implemented in 2020, require service providers to proactively remind customers before their contract expires and provide information to help them find better deals. Telecoms and pay-TV companies must send “end-of-contract” notifications through text, email, or letter, between 10 and 40 days prior to the contract end date. They must also issue annual notifications to customers outside their minimum contract period, reminding them of their freedom to leave or switch to other deals, including information about the “best tariff.”
During its investigation, Ofcom discovered that Shell Energy violated these rules. Between March 2020 and June 2022, around 72,837 customers were affected. Shell failed to send the required end-of-contract notifications and best tariff notifications to some customers. In other cases, customers received notifications with inaccurate or incomplete information. These failures were attributed to a combination of manual errors and system/process failures within Shell Energy.
One particularly concerning finding was that approximately 7,750 customers received incorrect information about the prices they would pay after their minimum term expired. As a result, 6,054 of them faced higher charges than originally quoted, totaling £398,417.67 (an average of £65.81 each).
Ofcom’s enforcement director, Suzanne Cater, emphasized the significance of these consumer protection rules, stating that they are in place to help customers make significant savings when their contracts end. She emphasized that Shell Energy’s violations were serious and stressed the importance of compliance.
Shell Energy reported the breach itself, cooperated with the investigation, and implemented changes to prevent similar incidents in the future. The company has already refunded affected customers, while also deciding not to issue refunds lower than £3 to former customers. Instead, it donated an equivalent amount to charity, including unclaimed refunds. However, Ofcom has required Shell to make refunds available to customers upon request.
This is not the first time Shell Energy has faced financial penalties for breaching regulations. In 2021, the company’s consumer division was fined £536,000 by Ofgem for overcharging customers with prepayment meters since the introduction of the energy price cap in 2019.
Frequently Asked Questions (FAQ)
Q: What were the rules that Shell Energy violated?
A: Shell Energy failed to comply with Ofcom’s consumer protection rules, which require providers to alert customers about the end of their contracts and provide information to help them find better deals.
Q: How many customers were affected by Shell Energy’s failures?
A: Approximately 72,837 customers were affected between March 2020 and June 2022.
Q: Will affected customers receive refunds?
A: Yes, Shell Energy has already refunded affected customers and has been required by Ofcom to make refunds available to customers upon request.
Q: Is Shell Energy taking steps to prevent similar incidents?
A: Yes, the company has made changes to its systems and processes to help prevent future breaches of consumer protection rules.
Q: Did Shell Energy admit liability?
A: Yes, Shell Energy admitted liability and cooperated closely with Ofcom during the investigation.