Ofgem has announced a £2.5 million penalty on British Gas after an investigation by the regulator found that the company had breached regulations setting standards for the way energy companies handle customer complaints.
The investigation found that British Gas had failed to re-open complaints when the customer had indicated that the complaint was not resolved. The company also failed to provide customers whose complaint they could not resolve with some key details about the redress service provided by the Energy Ombudsman. In addition British Gas failed to put in place adequate processes and practices for dealing with complaints from micro-businesses.

Sarah Harrison, Ofgem's senior partner for sustainable development, said: 'Today's finding highlights basic failures in British Gas' customer service, particularly in dealing with some of its small business customers, and shows Ofgem's commitment to use its powers to ensure suppliers treat customers fairly and transparently.

'We warned the industry in March that we would be backing up our plans to reform the retail market with a tough approach to enforcement. This £2.5m fine against British Gas, and the other £10m of fines imposed on the energy industry so far this year, sends a clear message to energy companies that they must abide by the rules.'

Since Ofgem started the investigation in June 2010, British Gas has taken action to improve its complaint handling systems and ensure it is compliant with Ofgem's regulations. Ofgem is currently investigating Npower and EDF Energy for complaint handling; Scottish Power, Scottish and Southern Energy, EDF Energy and Npower for miss-selling, and is undertaking two investigations into Scottish Power for potentially misleading marketing and the difference between its standard credit and direct debit tariffs.

The complaint handling regulations took effect from October 2008 and complement the role of the Energy Ombudsman. The regulations set out the service that domestic and micro-business energy customers should expect from energy companies if they raise a complaint.

Ofgem says the fine is a warning that all energy companies must take complaint handling seriously and treat their customers fairly.