Ofcom has today fined Shell Energy £1,400,000 for not properly prompting more than 70,000 phone and broadband customers to review their contract, or letting them know what they could save by signing up to a new deal.
Ofcom’s investigation found that the company broke important consumer protection rules designed to ensure that customers get a fair deal for their communication services.
These rules – introduced by Ofcom in 2020 – require that providers proactively prompt their customers before their existing contract is up and provide important information to help them shop around and take advantage of a better deal. They also require providers to remind their customers if they are already outside of their minimum contract period.
Specifically, telecoms and pay-tv companies must issue an ‘end-of-contract’ notification to customers – by text, email or letter – between 10 and 40 days before their minimum contract period comes to an end. They must also send notifications at least annually to customers who are already outside of their minimum contract period, reminding them that they are free to leave or change deal.
Both notifications must include ‘best tariff’ information that will help customers understand whether they can save money by changing provider or signing up to a new deal.
Ofcom’s investigation found that Shell Energy broke its rules by failing to send the required end-of-contract notifications and annual best tariff notifications to some of its customers. Also 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.
Says Suzanne Cater, Enforcement Director at Ofcom:
“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.”
Adds Alex Tofts, broadband expert at Broadband Genie:
“This hefty fine for Shell Energy is a wake-up call for all providers thinking they can just switch off once they’ve signed up new customers.
“Ofcom introduced end-of-contract notifications three years ago as a way to help the millions of consumers who end up overpaying for their broadband.
“Any provider not putting this safety net in place is showing a disregard for consumers, and the fact that well over one in ten of Shell Energy’s customers were affected, shows how severe this rules breach was.
“It also comes at a time of big change for the provider’s parent company, Shell Energy, which was bought by Octopus earlier this year. The fate of its broadband arm, which has often scored poorly for customer service complaints, remains uncertain.
“Whoever takes the reins needs to roll up their sleeves to ensure customers are given fair treatment and a satisfactory broadband service.”