British Gas has agreed to pay £20m into a compensation fund and write off up to £70m in energy debt after an investigation into the forced installation of prepayment meters in vulnerable households. The settlement follows one of the largest and most politically sensitive investigations ever carried out by energy regulator Ofgem.
The scandal emerged after reports revealed that debt agents acting on behalf of British Gas had entered homes under warrant to install prepayment meters during the energy crisis. According to Ofgem, the company failed to meet standards designed to protect vulnerable customers between 2018 and 2023.
The regulator said some customers who should not have had meters installed were subjected to the practice despite clear concerns over vulnerability. British Gas has apologised and said it has since changed its procedures and safeguards.
The case became a wider controversy across the energy industry after thousands of households were found to have had prepayment meters installed without consent during the sharp rise in energy bills linked to the gas crisis.
Ofgem Investigation Found Repeated Failures Over Several Years
According to the BBC and Ofgem, British Gas was first alerted to concerns through an external review in 2018. The issue was raised again during an internal audit in 2021, yet the supplier did not suspend forced installations until 2023 after media reports exposed the practice publicly.
The Times newspaper revealed that agents working for Arvato Financial Solutions, acting for British Gas, had entered the home of a single father to install a prepayment meter. An undercover reporter observed locksmiths forcing entry after the property was judged to be unoccupied.
Ofgem said the company breached licence conditions intended to protect vulnerable households and failed to ensure that installations under warrant were carried out appropriately. The regulator described the inquiry as one of the most detailed and complex investigations in its history.
Tim Jarvis, chief executive of Ofgem, said British Gas “fell short in its treatment of an unacceptable number of vulnerable customers who had a PPM installed without consent”. He added that prepayment meter installations under warrant should only be used “as a last resort”, with suppliers required to ensure debt recovery is carried out lawfully and safely.
According to The Guardian, British Gas will now have a year to identify affected customers and determine how compensation and debt relief will be distributed. Customers do not need to take any action and will be contacted directly.
Compensation Package Follows Wider Industry Scandal
The settlement includes a £20m payment into Ofgem’s voluntary redress fund, alongside debt write-offs worth up to £70m. British Gas must also continue providing the remainder of a previously announced £22.4m support package for prepayment meter customers.
The investigation covered practices between February 2018 and February 2023, when the company voluntarily stopped carrying out forced installations. British Gas said it has since strengthened governance procedures and introduced additional checks for vulnerable customers.
Chris O’Shea, chief executive of Centrica, which owns British Gas, apologised to affected households, saying: “What happened should never have happened.”
The wider industry has already faced enforcement action linked to prepayment meters. Ofgem previously secured compensation and debt write-offs from several other suppliers, including EDF, E.ON and ScottishPower, covering around 40,000 households.
Campaign groups said the findings highlighted serious failings during the cost-of-living crisis, when some households were left without heating or electricity after running out of credit on their meters. Ofgem has since tightened rules governing forced installations, including bans covering households with very young children and residents aged over 75.
