Shell Energy fined £1.4m for failing to flag end of contracts and best deals to phone and broadband customers
Ofcom has today fined Shell Energy £1,400,000 for not properly prompting more than 70,000 phone and broadband customers to review their contract, or letting them know what they could save by signing up to a new deal.
Ofcom’s investigation found that the company broke important consumer protection rules designed to ensure that customers get a fair deal for their communication services. These rules – introduced by Ofcom in 2020 – require that providers proactively prompt their customers before their existing contract is up and provide important information to help them shop around and take advantage of a better deal. They also require providers to remind their customers if they are already outside of their minimum contract period.
Specifically, telecoms and pay-tv companies must issue an ‘end-of-contract’ notification to customers – by text, email or letter – between 10 and 40 days before their minimum contract period comes to an end. They must also send notifications at least annually to customers who are already outside of their minimum contract period, reminding them that they are free to leave or change deal. Both notifications must include ‘best tariff’ information that will help customers understand whether they can save money by changing provider or signing up to a new deal.
Our investigation found that Shell Energy broke our rules by failing to send the required end-of-contract notifications and annual best tariff notifications to some of its customers.
Specifically, we found that 72,837 customers were affected by Shell Energy’s failures between March 2020 and June 2022. In some instances, the company failed to send out end-of-contract notifications and annual best tariff notifications at all. In other cases, customers were issued with notifications that included inaccurate or incomplete information. This was caused by a combination of manual errors and systems and process failures at Shell Energy.
Notably, 7,750 customers received an end-of-contract notification that contained incorrect information about the price they would pay once their minimum term period came to an end. Of these customers, 6,054 went on to pay higher charges than they were originally quoted, collectively amounting to £398,417.67 – an average of £65.81 each.
Financial penalty and customer refunds
As a result, Ofcom has today imposed a financial penalty of £1,400,000 on Shell Energy, payable to HM Treasury within four weeks. This penalty includes a 30% discount from the amount Ofcom would otherwise have imposed following Shell Energy’s admission of liability and agreement to enter into Ofcom’s settlement process.
In setting the level of financial penalty, we considered that this was a serious breach of our rules to protect customers. The penalty would have been significantly higher had Shell Energy not self-reported the contravention, co-operated closely with our investigation and proactively taken steps to remedy the breaches following discovery of the issue. In addition, Shell Energy has since made a number of changes to its systems and processes to help prevent future recurrence.
The company also moved quickly to refund affected customers and this exercise is now complete. Shell Energy decided not to issue refunds lower than £3 to ex-customers, and in lieu of this, has donated an equivalent amount to charity – this amount includes unclaimed refunds. Ofcom has required Shell Energy to make refunds available to these customers should they request it.
Suzanne Cater, Enforcement Director at Ofcom said:
"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."
Latest News from
Customers’ experiences of different parcel firms revealed07/12/2023 16:20:00
People who receive parcels are experiencing substantially different levels of satisfaction depending on which parcel company delivers their package, according to new research published today by Ofcom.
Implementing the Online Safety Act: Protecting children from online pornography05/12/2023 13:15:00
Children are set to be protected from accessing online pornography under new age-check guidance proposed by Ofcom today to help services to comply with online safety laws.
Working class audiences want the BBC to take more risks when producing new programmes01/12/2023 15:15:15
The BBC should take more risks when producing new programmes if it is to reconnect with viewers and listeners on lower incomes, according to new audience research published today by Ofcom.
How the Online Safety Act will help to protect women and girls29/11/2023 16:20:00
Online interactions play a major role in our daily lives. While most people have positive experiences online, for many women and girls life online can be an extension of harmful gender dynamics that exist in wider society.
Gen Z driving early adoption of Gen AI, our latest research shows29/11/2023 10:25:00
Teenagers and children in the UK are far more likely than adults to have embraced generative artificial intelligence (AI) according to Ofcom’s latest study into the nation’s online lives.
Top trends from our latest look at people's online lives28/11/2023 13:20:00
Our latest Online Nation research takes a look at how people in the UK are spending their time online.
UK adult site introduces age verification measures following engagement with Ofcom27/11/2023 13:15:00
Tapnet Ltd – which provides the online adult video service RevealMe – has introduced age verification measures, after Ofcom raised concerns that it was not doing enough to prevent children from being able to access pornography on its platform.
Ofcom investigation helps to convict man for amateur radio interference27/11/2023 09:20:00
Investigations carried out by Ofcom’s spectrum experts have helped to secure the conviction of a man who was deliberately causing harmful interference to amateur radio users in and around Hull.