Centrica-owned British Gas has had to pay out £2.65 million after overcharging over 94,000 customers who switched to new providers.
The energy provider wrongly charged exit fees to 1,698 fixed deal customers whilst also wrongly telling 2.5 million customers they may incur an exit fee.
Ofgem, the energy regulator, began the investigation in July last year following concerns raised by the website MoneySavingExpert.com.
“British Gas failed its customers who were coming to the end of their fixed contracts and switched supplier by unfairly penalising them and applying charges in error. Many more customers could have been deterred from getting a better deal due to the incorrect terms and conditions,” said Anthony Pygram, the director of conduct and enforcement at Ofgem.
“Our enforcement action against British Gas sends a strong message to all suppliers that they must respect their customers’ rights during the switching window and always treat customers fairly,” he added.
Centrica has said the group has corrected its terms and conditions for customers and has made it clear that no exit fees will be charged. The energy company will also appoint an external auditor to review the relevant policies and procedures.
“A system error led to a small proportion of customers being incorrectly charged. We’ve apologised to the customers affected. Those who were charged too much were promptly refunded as soon as we identified the issue and were paid an additional goodwill gesture,” said a spokesperson from Centrica.
“Some customers were provided with initial communications containing incorrect terms and conditions – but all other communications they received were correct,” the spokesperson added.
British Gas announced earlier this year that it plans to raise its standard variable tariff by 3.8 percent on 1 October. The move will affect 3.5 million customers.
Shares in the group (LON: CNA) are currently trading at 142,15 (1356GMT).