Ofcom has fined utilities supplier Shell Energy £1.4 million today for neglecting to remind over 70,000 phone and broadband customers to review their contracts or inform them about potential savings through new deals.
The £1.4 million penalty on Shell Energy can be reduced by a third if the company admits of liability and agrees to rectify the situation. Shell Energy cooperated with the investigation.
Shell Energy, which is provided by Talk Talk, has refunded affected customers, excluding amounts below £3, which were donated to charity instead. However, Shell Energy must honor refund requests for these amounts if customers demand it.
Ofcom found Shell violated consumer protection regulations established to ensure fair deals for communication service users and which were implemented by Ofcom in 2020.
The rules require service providers to proactively remind customers before their contract ends. Providers must also notify customers outside their minimum contract period, informing them to consider switching or altering their deal. Notifications must include details on the best tariff available to help customers assess potential savings.
Ofcom’s investigation found Shell Energy failed to send required end-of-contract and annual best tariff notifications to 72,837 customers were affected between March 2020 and June 2022.
“Shell Energy’s failings represent a serious breach of our consumer protection rules and they must now pay the price”
Failures ranged from non-issuance of notifications to providing inaccurate or incomplete information due to errors in processes and systems. Among those affected, 7,750 customers received misleading end-of-contract notifications about their post-contract charges. As a result, 6,054 customers ended up paying higher fees than initially quoted, totaling £398,417.67, averaging £65.81 each.
Suzanne Cater, Ofcom’s Enforcement Director, emphasised the importance of the rules in safeguarding consumer interests.
“Every day 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. That’s why our rules, which demand that providers prompt customers with the information they need to take action, are so important.
“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”.