Business Secretary Grant Shapps says he is ‘horrified’ by the reports that British Gas sent debt collectors to ‘break into homes’ and force-fit pay-as-you-go meters on ‘vulnerable’ customers.
Mr Shapps announced today that the Government would hold meetings with the firm’s parent company Centrica to investigate what he called a ‘systemic failure’.
Energy companies can obtain court warrants which give them legal rights to enter people’s homes and fit prepayment meters if customers have not paid their bills.
Customers must then top up to continue receiving gas supplies, and if they fail to do so they risk their heating being cut off.
Warrants forcing customers into such agreements should only be used in exceptional circumstances and never be expected of vulnerable customers, energy regulator Ofgem states.
But an investigation by The Times allegedly determined the practice is happening more than ever. In response, British Gas announced that it has suspended applying for court warrants to enter customers’ homes and fit prepayment meters until at least the end of winter.
British Gas has announced it has suspended applying for court warrants to enter customers’ homes and fit prepayment meters following reports they sent debt collectors to ‘break into homes’ and force meters on ‘vulnerable’ customers
Energy companies can obtain court warrants which give them legal rights to enter people’s homes and fit prepayment meters if customers have not paid their bills (stock picture)
An undercover reporter for the newspaper worked for debt collecting contractor Arvato Financial Solutions and accompanied agents who used court warrants to gain entry into customers’ homes to force-fit these meters.
When agents arrived at a customer’s home, a manager would allegedly encourage them to threaten customers with the police if they did not comply with the orders.
Once a prepayment meter is fitted, customers must top up to get the gas to turn on. Regular repayments are then taken from the bank account, and the supply is cut off if there is not enough credit to cover the cost of the gas.
‘Switching customers – and particularly those who are vulnerable – to prepayment meters should only ever be a last resort and every other possible alternative should be exhausted,’ Mr Shapps told the BBC. ‘These findings suggest British Gas are doing anything but this.’
Centrica chief executive officer Chris O’Shea (pictured) described the actions of Arvato’s agents as ‘unacceptable’ and claimed the contractor ‘has let us down’
Energy companies are required to have ‘exhausted all other options’ before they install a prepayment meter.
Ofgem has also previously stated vulnerable people should not be forced to use prepayment meters. Vulnerability includes disability, mental health conditions, pregnancy and having children under the age of five.
Some of the ‘vulnerable’ customers the Times reporter came across while working with Arvato Financial Solutions included a single father with three young children and a mother with a four-week-old baby whose bills have risen amid the cost-of-living crisis.
Other customers who were forcibly fitted with prepayment meters reportedly include a woman battling ‘severe mental health bipolar’, a woman who ‘suffers with mobility problems’ and a mother whose daughter is ‘disabled’ and requires an electric wheelchair.
Elderly people were also allegedly described by some debt collectors as ‘easy targets.’
Owner of British Gas, Centrica, announced it was suspending ‘all warrant activity’ after the newspaper’s article was published. The parent company will also launch an investigation into the claims.
Centrica chief executive officer Chris O’Shea, addressing the allegations in the scathing report on Radio 4 this morning, described the actions of Arvato’s agents as ‘unacceptable’ and claimed the contractor ‘has let us down.’
He said as soon as Centrica learned of the allegations, that they ‘suspended Arvato’ and commissioned an independent report to ‘get to the bottom of what’s going on and therefore then fix it.’
Mr O’Shea claimed British Gas only applies for a warrant installed prepayment meter ‘when a customer refuses to engage’ with the company, noting it ‘usually takes five to six months for us to go through this process
Mr O’Shea further explained that Centrica currently serves 7million customers, most of whom pay their bills via direct debit.
Over the past year, 20,000 customers have reportedly had meters installed under warrant.
The energy boss claims that is ‘around about the same rate you find across the industry.’
He argued that Centrica, however, faces the challenge of customers who are unable to pay their bills, alleging: ‘If somebody falls into arrears it’s not responsible for us to not do anything.’
Mr O’Shea claimed that Centrica attempts to contact with debt-owing customers and ‘try to help them.’
He noted that the firm put together a £50million package last year, made up of voluntary contributions, to help customers who cannot pay.
He also said the firm only applies for a warrant installed prepayment meter ‘when a customer refuses to engage’ with the company, noting it ‘usually takes five to six months to go through this process.’
‘The only other option is customers who don’t pay and don’t engage, you allow them to run up unsustainable debts. No other business would do that,’ he argued.
‘The question is how do you deal with vulnerable customers? This is not something British Gas can solve on its own. This is not something Centrica can solve on its own – and it goes beyond energy costs.’
Once a prepayment meter is fitted, customers must top up to get the gas to turn on. Regular repayments are then taken from the bank account, and the supply is cut off if there is not enough credit to cover the cost of the gas
Mr O’Shea, in a statement provided to MailOnline today, added: ‘Protecting vulnerable customers is an absolute priority and we have clear processes and policies to ensure we manage customer debt carefully and safely.
‘The allegations around our third-party contractor Arvato are unacceptable and we immediately suspended their warrant activity.
‘Having recently reviewed our internal processes to support our prepayment customers as well as creating a new £10 million fund to support those prepayment customers who need help the most, I am extremely disappointed that this has occurred.
‘As a result, on Wednesday morning, we took a further decision to suspend all our prepayment warrant activity at least until the end of the winter.
‘More broadly, there are clearly significant challenges around affordability and unfortunately, we don’t see that changing anytime soon.
‘We need to strike a balance between managing spiralling bad debt and being aware that there are those who refuse to pay and those who cannot pay. We think Government, industry and the regulator need to come together to agree a long-term plan to address this and ultimately create an energy market that is sustainable.’
Energy regulator Ofgem has also announced it will launch an investigation.
A spokesperson told MailOnline: ‘These are extremely serious allegations from The Times which we will investigate urgently with British Gas and we won’t hesitate to take firm enforcement action.
‘It is unacceptable for any supplier to impose forced installations on vulnerable customers struggling to pay their bills before all other options have been exhausted and without carrying out thorough checks to ensure it is safe and practicable to do so.
‘We recently announced a major market-wide review investigating the rapid growth in prepayment meter installations and potential breaches of licences driving it. We are clear that suppliers must work hard to look after their customers at this time, especially those who are vulnerable, and the energy crisis must not be an excuse for unacceptable behaviour towards any customer – particularly those in vulnerable circumstances.’
An urgent meeting is expected to take place in the coming days between British Gas and government ministers over the investigation.
MailOnline has approached Arvato Financial Solutions and Mr Shapps for comment.