Ofgem tells suppliers to suspend forced installation of prepayment meters
The energy regulator Ofgem has asked suppliers to suspend the forced installation of prepayment meters and review their processes for dealing with customers who have fallen into arrears.
Sky News understands the regulator made the request on Thursday after it was revealed that debt collectors working for British Gas had forced their way into the homes of vulnerable customers.
Ofgem confirmed the decision on Friday.
Industry sources said Ofgem had asked all suppliers to cease applications for court warrants that allow them to enter the homes of customers who have not responded to attempts to deal with arrears.
The regulator had required British Gas to stop its forced installations programme.
"We're requiring British Gas to stop forced installations until its board proves to us it is fully compliant with the legal and regulatory obligations," the Ofgem chief executive said.
"We require all the documentation relating to its contract with Arvato to be turned over to us," Jonathan Brearley said.
"Our powers mean that licensees and third parties are required to comply - it is a criminal offence to destroy evidence or provide misleading information. We expect full and open co-operation form British Gas including the delivery of its preliminary internal report by the 13 February."
"We need the facts on how Arvato's bonus system installing meters worked, whether it was built into its contract and whether it led to vulnerable people being targeted for cash. We want to establish if it was down to individual teams or a more systemic issue across the company."
Suppliers are required to pursue all available alternatives over a six-month period before executing warrants and are not permitted to force prepayment on vulnerable customers.
Centrica, British Gas's parent company, said it had applied for about 97,000 warrants last year and acted on around 20,000 of them.
Mr Brearley said: "I've warned all domestic energy suppliers to get their house in order on forced instalments of prepayment meters.
"I ordered our biggest-ever market review into prepayment meters to uncover poor practice - and I will not hesitate to take the strongest action in our powers where needed.
"No energy CEO can shirk their legal and moral responsibilities to protect their own customers, especially the most vulnerable. These are serious allegations for British Gas to deal with and we are opening a comprehensive investigation into British Gas on this issue and we will not hesitate to take the strongest action needed.
"It is right British Gas has apologised following the very worrying allegations in The Times, but millions of customers expect action, not warm words.
"It is astonishing for any supplier not to know about their own contractors' behaviour, especially where they are interacting with the most vulnerable in our society."
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He added: "That's why I've asked all suppliers to review all activities regarding prepayment meter warrants. Suppliers need to reassure us that the processes for customers being moved onto prepayment meters are compliant with all Ofgem rules and, until this is done, we have asked them to pause forced installations.
"Many have already come forward and agreed to do this until their boards are satisfied vulnerable customers are protected. I've also asked them to look at their relationships with any third-party contractors and examine incentives that could give rise to poor and unacceptable behaviours."
The boss of Centrica said "there is no excuse" after a Times investigation showed a company used by British Gas to pursue debts, Arvato Financial Solutions, forcing their way into homes to fit the devices, despite signs children and disabled people were living there.
Chris O'Shea also said that customers do not deserve to be treated in such a way, and that he would not "justify it" - adding that he is launching an independent investigation.
"I am really, really sorry," he added, talking to Sky News' business presenter, Ian King.
"We've clearly got it wrong here and we are going to fix that."
After Centrica announced it was suspending all forced installations, EDF said it had launched a review of its practices and would not be pursuing warrants while it was ongoing.
EDF, the UK's second-largest supplier, said it had applied for almost 14,000 warrants in 2022 but not acted on around half after contacting customers and agreeing other means of controlling arrears. The company is understood to have acted out of caution rather than in response to evidence of bad practice.
In a statement it said: "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."
A Scottish Power spokesperson said: "We would not switch a customer to prepayment without advanced notice and installing a prepayment meter is always a last resort, only after we have exhausted all other options to speak to and work with customers on debt repayment.
"We deplore the behaviours reported and have suspended all warrant installations while a thorough investigation takes place."
Shell Energy said it had extended an annual winter moratorium on forced installations.
"Every year we pause installs in December and January, and we have extended this moratorium this winter. It's only ever a last resort if a customer doesn't engage with us for at least six months - we will always find a way to help if they do. And even then, if there is any sign of vulnerability we will not install a pre-payment meter.
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OVO Energy told Sky News it had suspended "warrant activity" in November and has now suspended all debt recovery on prepayment meters until March.
While there is great concern about the increase in the imposition of prepayment meters as a consequence of soaring prices, suppliers face financial pressure as a consequence of millions of customers struggling to meet payments.
Around 40% of customers are estimated to be spending more than 10% of their income on energy and nearly a million energy customers are now in arrears with suppliers with no plan to repay debts.