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Shell hit with £1.4m fine for breaking customer contract rules

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Shell Energy has been fined £1.4 million for its failure to inform 70,000 people their contracts were about to end.

The communication watchdog Ofcom’s investigation claims Shell didn’t guide its phone and broadband customers on potential savings through new deals. 

The watchdog accused the company of not complying with consumer protection regulations to ensure customers receive fair treatment. 

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Ofcom’s rules, implemented in 2020, mandate providers to prompt customers before their contract ends.

It also requires them to provide information to help customers shop around for better deals.

The investigation revealed Shell Energy violated these rules by neglecting to dispatch the required end-of-contract alerts and annual best tariff notifications to a portion of its customers. 

Between March 2020 and June 2022, 72,837 customers were affected by these lapses. 

Some were not sent end-of-contract or annual best-tariff notifications.

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However, others received notifications containing inaccurate or incomplete information due to manual errors and system failures at Shell Energy.

Approximately 7,750 customers received an end-of-contract notification with incorrect details about the post-contract period charges. 

Among them, 6,054 paid higher fees than initially quoted, totaling £398,417.67, averaging £65.81 per customer.

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Suzanne Cater, Ofcom enforcement director, said: “Every day tens of thousands of customers come to the end of their phone or broadband contract and can make significant savings by switching provider or signing up to a better deal. 

That’s why our rules, which demand that providers prompt customers with the information they need to take action, are so important.

“Shell Energy’s failings represent a serious breach of our consumer protection rules and they must now pay the price. 

“This sends a message to the whole industry that we won’t hesitate to step in on behalf of customers if they don’t play by the book.”

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The company refunded affected customers.

The fine is 30 percent lower due to Shell’s admission of liability and cooperation.

However, the firm must pay it to HM Treasury within four weeks.

Last year, Shell’s consumer division received a £536,000 fine from Ofgem for overcharging customers with prepayment meters since introducing the energy price cap in 2019.

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