Ofgem has issued non-domestic energy supplier Hudson Energy Supply UK (HES) with a £1,668,426 fine due to “failing its customers by not complying with a number of important licence conditions”.
This penalty has arisen following an investigation conducted by the energy regulator which started in July 2020. The findings, which have been published today (29 November), found that HES breached 10 Standard Licence Conditions (SLCs) – some having lasted up to five years.
HES was acquired by oil and gas giant Shell in October 2019 and later rebranded as Shell Energy in 2020.
The investigation found that HES agreed an arrangement with a third-party in which it would secure customers for the non-domestic energy supplier and conduct a number of customer facing activities. This partnership concluded in July 2020.
Perhaps the most striking breach Ofgem noted was that customers suffered “serious overcharging” with one month seeing an average overcharge by more than £1,800. In fact, one customer was overcharged by around £22,500.
Ofgem said that some of these customers did not receive their money back for up to seven months after it was taken from them.
Other issues included failing to ensure appropriate arrangements were in place to comply with its licence obligations throughout the relationship with the third party, outsourced elements of the day-to-day operations of its business without the appropriate supervision and a breach of conditions relating to the provision of important information at the time of contract renewal.
HES, along with parent company Shell, has admitted to all of the breaches, put in measures to ensure it does not happen again, and agreed to settle the case via the forementioned penalty. This will be paid into Ofgem’s Voluntary Redress Fund, which supports vulnerable energy customers and invests in carbon emission reducing projects.
Cathryn Scott, director of enforcement and emerging issues at Ofgem said: “As part of our role as the energy regulator, we expect suppliers to comply with their obligations, including where they choose to outsource elements of their business. In this case a series of failings by HES has resulted in unacceptable outcomes for energy customers, with a number being unjustifiably overcharged by significant amounts, resulting in serious customer harm.
“Through taking this action Ofgem is sending a firm signal to the market that it is not possible to outsource compliance with the licence conditions: the licence holder is responsible for any breaches and any harm caused to its customers.
“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 engaging and monitoring third parties carrying out important areas of their supply business on their behalf. This is a difficult time for all customers, and poor service and deliberate overcharging will simply not be tolerated.”
