British Gas owner Centrica and other energy suppliers must compensate customers for forced pre-payment meter installations even though a regulatory investigation is not yet complete, said the UK regulator.
“I’m telling suppliers not to wait for the outcome of our reviews and to act now,” said Ofgem chief executive Jonathan Brearley about the investigation, which is due to finish in late March.
“If rules have been broken, offer customers a reversal of installations and compensation payments where appropriate,” he said.
Earlier this month, the Times revealed a contractor of Centrica subsidiary British Gas had been forcefully entering customers’ homes to install pre-payment meters to reduce arrears levels.
Forced pre-payment meter fittings were subsequently banned by Ofgem until late March, over concerns about the behaviour of third-party debt collectors.
According to Cornwall Insight, British energy suppliers were exposed to around £1.9bn worth of debt in December from customers struggling to pay bills.
Some 345,000 cases were approved in courts for debt collectors to enter homes in the 11 months to December 2022, up 25% from 275,000 in 2019.
Under Ofgem’s licensing conditions, suppliers should not disconnect households' gas or electricity if they are struggling to pay bills unless certain services have been offered – including a pre-payment option.
As well as this, suppliers should not attempt to recover more than £150 from households at any given time, the regulator writes.
Brearley called on all suppliers in the UK to self-check whether rules had been broken, adding he was “concerned” by how customers were being treated given pre-payment meters should only be installed as a “last resort”.