Shell Energy fined £1.4m by Ofcom

Covering more than 70,000 consumers, the regulator’s investigation found the company broke important consumer protection rules designed to ensure that they get a fair deal for their communication services.  

These rules require providers proactively prompt their customers before their existing contract is up and provide information to help them shop around and take advantage of a better deal. They also require providers to remind their customers if they’re already outside of their minimum contract period.  

In the case of Shell, it found 72,837 customers were affected by the firm’s failures to do this between March 2020 and June 2022. In some instances, the company failed to send out end-of-contract and annual best tariff notifications at all while, in other cases, customers were issued with notifications that included inaccurate or incomplete information.  

Notably, 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. Of these, 6,054 went on to pay higher charges than they were originally quoted – amounting to £398,417.67, with an average of £65.81 each.  

Ofcom’s enforcement director Suzanne Cater 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.” 

Off the back of this, Ofcom has imposed a financial penalty of £1.4m on the business – this includes a 30% discount from the amount the regulator would otherwise have imposed following Shell Energy’s admission of liability and agreement to enter its settlement process.

The regulator has also said the penalty would have been significantly higher had the company not self-reported the contravention, co-operated closely with the investigation and proactively taken steps to remedy the breaches following the discovery of the issue. Additionally, it has since made a number of changes to its systems and processes to help prevent future recurrence.  

Credit Strategy reached out to Shell Energy for comment. In response, 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.”