Shell Energy has received a £1.4m fine from the communications watchdog Ofcom for a “serious breach” in consumer protection rules.
In a statement on the London Stock Exchange, Ofcom said it had fined Shell Energy for not prompting more than 70,000 customers over a two year period to review their contract, or giving them inadequate advice on how to get a better deal in future.
Rules introduced in 2020 require providers proactively give customers information helping them shop around for better deals, or notify them between 10 to 40 days before their minimum contract period comes to an end.
They must also send annual notifications to customers who have fallen outside of their minimum contract period, reminding them they are free to leave or switch to a more favourable package.
Ofcom said 72,837 customers had been affected by Shell Energy’s failure to send the so-called end-of-contract and best tariff notications between March 2020 and June 2022.
Some 7,750 customers received an end-of-contract notification which contained incorrect information about price options once the minimum term period finished. Of these, 6,054 went on to pay higher charges than they were originally quoted, collectively amounting to £398,417.67.
Shell Energy must pay the fine to HM Treasury within four weeks, and will recieve a 30 per cent discount following any admission of liability.
Suzanne Cater, enforcement director at Ofcom, said: “Everyday tens of thousands of customers come to the end of their phone or broadband contract and can make significant savings by switching provider or signing up to a better deal.”
“Shell Energy’s failings represent a serious breach of our consumer protection rules and they must now pay the price. This sends a message to the whole industry that we won’t hesitate to step in on behalf of customers if they don’t play by the book.”
Octopus Energy has agreed a deal to buy Shell’s UK energy arm in early September, meaning the company powers almost one in four British homes. The energy giant’s quarterly results for its global business revealed a sharp downturn in profits in November.
A Shell Energy Broadband spokesperson said: “Transparency and clarity for our customers is something we believe in strongly so we were extremely disappointed to have let some customers down in the past by not providing them with the notifications and accuracy we should have.”
“As soon as we became aware of the errors we self-reported to Ofcom, rectified the issues, compensated customers and supported Ofcom in its investigation. We apologise to any customer who we let down.”
“Over the past 12 months we’ve made substantial improvements in our broadband customer service experience, dramatically reducing complaints and boasting one of the fastest call-answer times in the country.”