Ofgem investigates exit fees at British Gas

British Gas is being investigated by the energy regulator over concerns it may have wrongly told customers they would be charged up to £60 for switching suppliers.

Ofgem said that it had opened an investigation into Britain’s biggest energy supplier to examine whether it had breached licence conditions related to charging exit fees. The company could face a fine if found guilty.

Fixed-term gas and electricity contracts are typically cheaper than standard variable tariffs but often include exit fees that penalise a customer if they switch before the contract term is up. Ofgem rules bar companies from charging these fees during the final 49 days of a contract, termed the “switching period”, so that they can sign up to a new deal before their old one runs out.

The investigation follows concerns raised by Moneysavingexpert, the consumer advice website, which last year reported that customers of British Gas and Npower had been incorrectly told they could face fees of up to £60. Customers at Eon also raised complaints.

Moneysavingexpert lodged a formal complaint with Ofgem in March, prompting the regulator to contact the suppliers. Martin Lewis, founder of Moneysavingexpert, said: “At least two firms — British Gas and Npower — have wrongly put that they would charge in their official literature. At best they are careless in the way they treat customers; at worst they are trying to bully them into staying with misinformation. I’m delighted that Ofgem is getting tough with them following our investigation.”

The website has said that customers were not thought to have actually been charged the incorrect fees, although it is understood this will form part of the investigation. An Ofgem spokesman said: “Energy suppliers are obliged to waive any termination fees for domestic customers wishing to switch supplier in the period of 49 days before their fixed deal comes to an end.

“We have reviewed the evidence received to date and will be conducting a thorough investigation to establish whether British Gas failed to comply with the conditions of its licence.”

A spokesman for British Gas said: “British Gas will co-operate fully with Ofgem to address the issues raised in today’s announcement.”

Ofgem said it was still in discussions with Npower and Eon over the issue.