Ofgem has issued United Gas & Power Ltd (UGP) with a penalty fine of over £2 million after breaching numerous Standard Licence Conditions (SLCs), including deliberately overcharging customers.
This follows an investigation launched in July 2020, which found that in February of that year the non-domestic supplier billed some customers at inflated consumption estimates despite having actual consumption data available.
UGP overcharged the average customer by more than £2,000, with one customer overcharged by more than £22,000.
Ofgem found that some of these customers did not have the full amount returned as promptly as they could have, with some not receiving money back for up to seven months after it was taken from them.
As such, the supplier – which serves around 2,700 non-domestic customers – has been issued with a penalty of £2,111,798.00.
Prior to Ofgem’s intervention, UGP had apologised to the customers who had been overcharged, and made signification goodwill gesture payments, the regulator noted when issuing the penalty.
“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,” said Cathryn Scott, director of Enforcement and Emerging Issues at Ofgem.
“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.”
UGP breached eight other SLC breaches as well as overcharging customers, including some which lasted for over five years. These include how it handled the credit balances of former customers, such as failing to promptly return the credit owed to former customers.
The supplier amassed just shy of £250,000 in credit balances from microbusiness consumers (MBCs). It has returned just over half of this money now, but some former customers cannot be located.
Additional breaches of the SLCs relate to billing, as well as the proper identification of MBCs. Affected customers therefore were not afforded the relevant protections.
It also breached conditions relating to the provision of important information at the time of contract renewals, meaning MBCs didn’t have the required information to make informed choices when switching, harming their ability to take advantage of other available deals.
UGP has taken appropriate remedial actins to improve its processes and performance, Ofgem noted.
“During the period between 2016 and 2022, the investigation found that we breached rules around billing, meter reading, and communications, resulting in a financial penalty. We have taken this matter very seriously and have been working closely with Ofgem to address the issues raised,” said UGP in a statement.
“We have implemented several measures to improve our services, which include replacing our aging CRM/billing system with a new and improved system, updating our compliance culture and training, and reviewing and updating our Treating Customers Fairly statement, renewal letters, principal terms, and terms and conditions to provide greater clarity and transparency to our customers.
“We have placed our compliance culture at the forefront of our business, and we are confident that this will enable us to maintain strong relationships with our customers. It is important to us to reassure our customers that we remain committed to providing the highest standards of service and customer care.”
Following the investigation, Ofgem has agreed to settle the case following the imposition of the penalty. UGP will now pay a nominal fine of £1 and £2,111,798.00 (less £1) to the regulator’s Voluntary Redress Fund, which will then be distributed to appropriate organisations.
“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,” finished Ofgem’s Scott.
The full list of SLC’s UGP breaches include:
| No. | Breach descriptor | Breach Period |
| 1 | Failed to bill customers based on meter readings and instead deliberately overcharged some customers by using inflated consumption estimates, contrary to SLC 21B.1 | Feb-20 |
| 2 | Failed to communicate appropriately with MBC customers, having made billing errors and which consequently led to significant catch-up bills, contrary to SLC 0A.2 | 6 February 2020 to 29 April 2020 |
| 3 | Failed to properly identify customers that met the criteria of a MBC, during the onboarding and contract renewal processes, contrary to SLC 7A.1 (a) and (b) | 1 April 2016 to 1 January 2022 |
| 4 | Failed to provide information clearly, or at all, in relation to credit balances on closed accounts, either on final bills issued or in any other communication, contrary to SLC 0A.2 | 10 October 2017 to 12 January 2022 |
| 5 | Failed to provide information clearly, or at all, in relation to credit balances on closed accounts, either on final bills issued or in any other communication, contrary to SLC 7B.5 | 1 February 2017 to 9 October 2017 |
| 6 | Failed to issue Statements of Renewal to MBCs that gave important information appropriate prominence, contrary to SLC 0A.2 | 10 October 2017 to |
| 7 | Failed to issue Statements of Renewal to MBCs that gave important information appropriate prominence, contrary to SLC 7B.5 | 1 February 2017 to 9 October 2017 |
| 8 | Failed to provide the required information to MBCs during the contract renewal process, contrary to SLC 7A.8 (e) and (f) | 1 February 2017 to 19 October 2020 |
| 9 | Failed to provide Principal Terms to MBCs, contrary to 7A.8 (b) (i) and (ii) and (d) | 1 February 2017 to 31 August 2021 |
