Shell Energy fined £1.4m by Ofcom for breaching consumer protection rules

The electricity, phone and broadband provider arm of Shell has been fined £1.4m by the communications regulator for breaking customer protection rules.

Shell Energy was hit with the fine for failing to flag contract ends and the best deals for phone and broadband customers, Ofcom said.

More than 70,000 such customers were not properly prompted to review their contracts or told they could save by moving to a new plan, the Ofcom decision said.

An investigation by the watchdog found “important consumer protection rules” were broken.

The investigation uncovered 72,837 customers who were affected by Shell Energy’s failures between March 2020 and June 2022.

Providers are required to proactively let customers know before their existing contracts are up and to provide information to help them shop around and take advantage of a better deal.

Customers must also be told if they are already outside of their minimum contract period.

There’s a specific requirement for telecoms and pay-tv companies to issue an end-of-contract notification to customers by text, email or letter between 10 and 40 days before the minimum contract period comes to an end.

Annual notifications also have to be sent to customers already outside of the minimum contract period, reminding them they can leave or change deal.

Both notifications must include best tariff information to help customers understand the savings they can make on a new deal or by changing provider.

But in some instances Shell Energy failed to send out end-of-contract notifications and annual best tariff notifications at all.

In other cases, customers were notified but received inaccurate or incomplete information. This was caused by a combination of manual errors and systems and process failures at Shell Energy, Ofcom said.

A total of 7,750 customers received an end-of-contract notification that contained incorrect information about the price they would pay once their minimum term period came to an end.

The effect was 6,054 customers went on to pay higher charges than they were originally quoted, collectively amounting to £398,417.67 – an average of £65.81 each.

A Shell Energy Broadband spokesperson said: “Transparency and clarity for our customers is something we believe in strongly so we were extremely disappointed to have let some customers down in the past by not providing them with the notifications and accuracy we should have.

“As soon as we became aware of the errors we self-reported to Ofcom, rectified the issues, compensated customers and supported Ofcom in its investigation. We apologise to any customer who we let down.”

“Over the past 12 months we’ve made substantial improvements in our broadband customer service experience, dramatically reducing complaints and boasting one of the fastest call-answer times in the country.”