British Gas has agreed to pay £20 million in compensation and write off up to £70 million of customer debt following an Ofgem investigation into the company’s treatment of vulnerable customers with prepayment meters. The settlement marks the largest redress package ever imposed on a UK energy supplier and addresses practices uncovered during a three-year inquiry that began after an undercover investigation revealed British Gas was forcefully installing prepayment meters, sometimes by breaking into customers’ homes.

The regulator found that British Gas had breached licence conditions protecting vulnerable customers and fell short of expected standards, particularly in cases where meters were installed under warrant inappropriately. Ofgem’s investigation identified shortcomings that had been flagged in a 2018 external review and a 2021 internal audit, but which were not adequately addressed or corrected over time.

British Gas will compensate customers affected between 2018 and 2021 in addition to earlier payments made to those impacted in 2022 and 2023. The company will also maintain support from a £22.4 million package established in 2023 for customers using prepayment meters and has pledged to create a vulnerable customers debt advisory panel to improve its approach to customer debt.

The energy supplier voluntarily suspended forced meter installations under warrant in 2023, and Ofgem has since imposed a permanent ban on such installations for high-risk groups including those over 75 and households with children. However, the regulator allowed certain suppliers including EDF, Scottish Power, and Octopus to resume installing prepayment meters without consent in non-vulnerable households under specific conditions.

British Gas parent company Centrica’s chief executive, Chris O’Shea, expressed regret over the issue and reaffirmed the company’s commitment to rectifying the situation, stating that once the problems were exposed, the company immediately halted the practice and implemented process improvements.

Consumer advocates have welcomed the redress but called for stronger, permanent legal measures to prevent forced prepayment meter installations and reform the warrant process. Simon Francis from the End Fuel Poverty Coalition emphasized that penalties alone do not resolve the underlying issues and highlighted the need for comprehensive legislation, potentially through the forthcoming Energy Independence Bill.

While British Gas has been the focus of the investigation, other suppliers have also faced scrutiny. Between 2022 and 2023, approximately 40,000 customers had prepayment meters installed without their permission, with energy companies such as EDF and Scottish Power agreeing to make compensation payments. Critics have noted the lengthy duration of the regulatory response, arguing that the three-year investigation delayed justice for affected customers.

Ofgem chief executive Tim Jarvis acknowledged the failures, stating that British Gas fell short in its treatment of vulnerable customers and that the measures taken are necessary to make amends. The wider energy market review conducted by Ofgem in 2022-23 led to eight suppliers paying a combined £73.6 million in compensation, debt write-offs, and hardship payments as part of broader efforts to improve consumer protections.