Ofgem smacks supplier with £2.1m mega-fine for overcharging customers
Ofgem has slapped United Gas & Power (UGP) with a hefty £2.1m fine after determining it had breached its licence conditions, including the deliberate overcharging of customers.
The decision follows a near three-year investigation which began in July 2020, with the business energy supplier serving around 2,700 customers.
UGP will now pay out a nominal £1 fine and £2.1m to Ofgem’s voluntary redress fund.
The watchdog’s investigation found that despite having actual consumption data available, UGP billed some customers on inflated consumption estimates.
This enabled it to generate extra revenue for itself to remedy a shortfall in its budget.
The average customer was overcharged by more than £2,000, with one customer overcharged by more than £22,000.
Some of these amounts were not returned as quickly as they could have been, with some customers not receiving their money back for up to seven months after it was taken from them.
Alongside overcharging consumers, Ofgem found eight other breaches of licensing conditions – some lasting for five years and longer.
This includes the handling of credit balances on former customers’ accounts, with credits owed to customers not returned promptly or at all.
It also breached licence conditions relating to the provision of important information at the time of contract renewal, leaving many customers without the required information to make informed switching choices and take advantage of other deals available.
In relation to the other breaches in the case, UGP has taken appropriate remedial actions to improve its processes and performance.
Cathryn Scott, director of enforcement and emerging issues at Ofgem, said: “UGP’s behaviour was unacceptable. No matter what financial difficulties companies may find themselves in, it is plainly unjustifiable and wholly unacceptable to deliberately overcharge customers to boost revenue.
“In addition to this overcharging, it is concerning that UGP failed to return credit owing to former customers and retained such large sums in their own account, only refunding customers following Ofgem’s intervention.
“These are very difficult times for businesses and energy consumers. This significant penalty should send a strong signal to all suppliers in the market to act with the utmost care and integrity when it comes to customers’ money.”
UGP has been approached for comment.
Ofgem is currently engaged in an investigation of the energy market’s use of forced prepayment meters, warning that fines will be handed out for improper use.