Shell’s energy, phone, and broadband provider division received a £1.4m penalty from Ofcom, the UK’s communication watchdog, following an inquiry that revealed breaches in regulations meant to ensure consumers get a fair deal on their communication services. The violation was due to Shell’s failure to provide 72,837 clients with end-of-contract and annual best tariff notices between March 2020 and June 2022, with the company attributing these omissions to manual and system processing errors.
The regulations in question were implemented in 2020 and stipulate that providers should warn their customers before their current contracts conclude and offer information on other potentially better deals. They also mandate providers to remind customers if their contracts have already passed the minimum term.
More specifically, telecom and pay-TV providers are required to dispatch an ‘end-of-contract’ alert to customers 10 to 40 days prior to the end of their minimum contract duration. Additionally, they need to notice those already past these minimums, reminding them that they are free to terminate their engagements. These notifications must contain information assisting customers in determining whether they can save by transitioning to a different provider or agreeing to a new deal.
Furthermore, 7,750 customers received an end-of-contract alert with misleading information regarding their contract costs after the expiry of their minimum terms. Of these, 6,054 ended up paying a higher amount than initially quoted, averaging about £65.81 each.
Suzanne Cater, the enforcement director at Ofcom stated, “Every day tens of thousands of customers finish their phone or broadband contract and can effect significant savings by switching the provider or agreeing to better terms. Our regulations requiring providers to inform customers so they can take action are vital.” Cater also added: “Shell Energy’s failings are a serious infringement of our consumer protection regulations, and they must now pay the price. It communicates to the entire industry that we don’t hesitate to intervene on behalf of customers if they don’t adhere to regulations.”
Shell expressed that it self-reported these faults to Ofcom immediately upon recognition and extended its apologies to all affected customers. As per the mandate, Shell must pay the £1.4 million fine to HM treasury within a month.
