Shell Energy has been fined £1,400,000 for not properly issuing end of contract notifications to 72,000 of its customers. In some cases, Shell failed to send texts, emails and letters informing customers their contracts were coming to an end. In other instances, customers were issued with inaccurate information on how much they would be expected to pay once their minimum term came to an end
This breaks Ofcom's consumer protection rules, designed to ensure customers pay a fair amount for their telecoms service. Broadband contracts usually run for 12, 18 or 24 months. After this, providers will move customers onto a 1-month rolling contract, usually at a higher rate.
These rules were introduced by Ofcom in February 2020 and require internet service providers and pay-TV companies to 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.
Customers who are already out of contract must also be contacted annually to inform customers of cheaper deals.
For breaching these rules, Shell Energy, which is in the process of being purchased by the Octopus Energy Group, will be penalised £1.4m, payable to HM Treasury within four weeks.
This penalty includes a 30% deduction as Shell reported the issue themselves, co-operated closely with Ofcom and has made changes to its systems and processes to help prevent a reoccurrence of the issue.
Shell Energy has refunded affected customers and has donated an equivalent amount to charity, the amount includes unclaimed refunds. However, it has decided not to refund amounts lower of £3 to ex-customers.
Ofcom has required Shell to make refunds available to customers that request it.
Alex Tofts, broadband expert at Broadband Genie, comments: “This hefty fine for Shell Energy is a wake-up call for all providers thinking they can just switch off once they’ve signed up new customers.
“Ofcom introduced end-of-contract notifications three years ago as a way to help the millions of consumers who end up overpaying for their broadband. With typical contracts lasting 18 months or more, it’s easy to forget when your current internet package is expiring, so these advance nudges - by email, text or letter - are vital to stop people sleepwalking onto rolling deals, and increased bills.
“Many households have benefited from this regulation, either through saving money after switching to a cheaper deal or being able to move to a faster package for less.
“Any provider not putting this safety net in place is showing a disregard for consumers, and the fact that well over one in ten of Shell Energy’s customers were affected shows how severe this rules breach was.
“It also comes at a time of big change for the provider’s parent company, Shell Energy, which was bought by Octopus earlier this year. The fate of its broadband arm, which has often scored poorly for customer service complaints, remains uncertain.
“Whoever takes the reins needs to roll up their sleeves to ensure customers are given fair treatment and a satisfactory broadband service. Committing to improvements will also make the provider more attractive to potential buyers.”
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