Ofgem has launched an investigation into British Gas following reports the firm has been sending debt collectors to “break into” customers’ homes to “force-fit” prepayment meters – including in vulnerable households.
The energy giant will also be hauled in front of Energy Minister Graham Stuart to explain itself as the Department for Business, Energy and Industrial Strategy (BEIS) said: “Forcibly switching customers should only ever be a last resort.”
British Gas has announced it will stop applying for court warrants to enter customers’ homes and fit prepayment meters following reports they had been forced on “vulnerable” customers.
Energy companies can obtain court warrants which give them legal rights to enter people’s homes and fit prepayment meters if customers have not paid their bills.
The Times reported that British Gas sends debt collectors to “break into” people’s homes and “force-fit” pay-as-you-go meters – even when customers are known to have “extreme vulnerabilities”.
An undercover reporter for the newspaper worked for debt collecting contractor Arvato Financial Solutions and accompanied agents who used court warrants to gain entry into customers’ homes to force-fit these meters.
Some of the “vulnerable” customers the Times reporter came across while working at Arvato Financial Solutions included a single father with three young children and a mother with a four-week-old baby.
“There are clear rules and they’ve obviously not been followed and therefore I need the regulator and the companies to do the right thing by people who are in the most difficult of circumstances and have been treated on this evidence appallingly.”
An Ofgem spokesman said: “These are extremely serious allegations from The Times which we will investigate urgently with British Gas and we won’t hesitate to take firm enforcement action.
“It is unacceptable for any supplier to impose forced installations on vulnerable customers struggling to pay their bills before all other options have been exhausted and without carrying out thorough checks to ensure it is safe and practicable to do so.
“We recently announced a major market-wide review investigating the rapid growth in prepayment meter installations and potential breaches of licences driving it.
“We are clear that suppliers must work hard to look after their customers at this time, especially those who are vulnerable, and the energy crisis must not be an excuse for unacceptable behaviour towards any customer – particularly those in vulnerable circumstances.”
The Department for Business, Energy and Industrial Strategy said: “Forcibly switching customers should only ever be a last resort.
“The Energy Minister will be meeting with British Gas in the coming days and will be demanding answers to ensure this systemic failure is addressed.”
A spokesman said: “In 2022, we applied for 13,766 warrants in relation to domestic customer debt and in around half of these cases we took the decision not to proceed once the customer had engaged and we understood their circumstances.
“We regularly review and update these processes and so we are confident they are fit for purpose. Nonetheless we are currently reviewing them again to reconfirm they are robust and see if we can make any improvements.
“We have suspended forced installation of prepayment meters while we conduct this latest review.”
Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said: “Ministers have fallen for the energy industry’s spin that they don’t use court warrants to install prepayment meters on vulnerable customers.
“The investigation reveals this not to be the case.
“It is time that the Government stood up to energy firms and banned the forced installation of prepayment meters and the forced switching of smart meters to prepayment mode.
“We also now need a formal inquiry into the prepayment meters scandal and the role of the courts in enabling this practice.”
Owner of British Gas, Centrica, announced it was suspending “all warrant activity” after the newspaper’s article was published.
Centrica chief executive officer Chris O’Shea said: “Protecting vulnerable customers is an absolute priority and we have clear processes and policies to ensure we manage customer debt carefully and safely.
“The allegations around our third-party contractor Arvato are unacceptable and we immediately suspended their warrant activity.
“Having recently reviewed our internal processes to support our prepayment customers as well as creating a new £10 million fund to support those prepayment customers who need help the most, I am extremely disappointed that this has occurred.
“As a result, on Wednesday morning, we took a further decision to suspend all our prepayment warrant activity at least until the end of the winter.
“More broadly, there are clearly significant challenges around affordability and, unfortunately, we don’t see that changing any time soon.
“We need to strike a balance between managing spiraling bad debt and being aware that there are those who refuse to pay and those who cannot pay. We think government, industry and the regulator need to come together to agree a long-term plan to address this and ultimately create an energy market that is sustainable.”
Hundreds of thousands of customers have been switched over to more costly prepayment meters, often unwillingly and without the offer of support, after failing to keep up with rising energy payments.
Some have found their smart meters switched to prepayment mode remotely while others have been confronted at their door by teams sent by energy companies – armed with magistrates’ court warrants – to physically make the change.
Just last week, Ofgem said it is to review the checks and balances that energy firms have around placing customers on prepayment meters, warning it will take further legal action if it finds they are not taking due care.
In a blog, the watchdog’s chief executive, Jonathan Brearley, said he is concerned about the “sharp growth in households struggling to pay their bills being switched over to pre-payment meters, sometimes without their even knowing about it, leaving them without heating”.
It followed Business Secretary Grant Shapps’ demand that energy suppliers stop forcing financially-stretched households to switch to prepayment meters.
He also vowed to “name and shame” the worst offenders.
Mr Brearley wrote: “The numbers of forced installation of prepayment meters is extremely high. It is simply not acceptable that vulnerable customers are left in the dark and cold in winter.
“This review will focus specifically on self-disconnections, remote switching and forced installations, and the checks and balances companies have around any decision to put a customer on a prepayment meter.
“If we find that they have not taken due care in this process, we will take further legal action against them.”
Campaigners say those switched often then go without power as they cannot afford to keep the meter topped up – something that is referred to as “self-disconnection”.
It comes after energy bills have soared due to rampant inflation and the impact of Russia’s invasion of Ukraine.