Investigation into BES and its compliance with its obligations under the gas and electricity supply licences (Standard Licence Conditions 7A, 7B, 7, 14 and 21B) and with the Consumer Complaints Handling Standards Regulations 2008

Opened:
Oct 2014
Decision Proposed:
Nov 2015
Closed:
Dec 2015

We investigated whether BES Commercial Electricity Ltd and Business Energy Solutions Ltd (together referred to as "BES") complied with the requirements of Standard Licence Conditions (SLCs) 7A, 7B, 7 and 14 of their gas and electricity supply licences and with Regulations 4 and 5 of the Gas and Electricity (Consumer Complaints Handling Standards) Regulations 2008 (the CHSRs).

The Authority found that BES breached the following relevant conditions and requirements:

  • SLC 7A.4(b) – Supply to Micro Business Consumers – These provisions require that, before a licensee enters into a Micro Business Consumer Contract, it must take all reasonable steps to bring the Principal Terms of the proposed contract to the attention of the consumer and ensure that the information is communicated in plain and intelligible language. These conditions were breached for the period 8 June 2010 to 12 July 2015 (Breaches 1 and 2).
  • SLC 7B – Customer Objective and Standards of Conduct for non-domestic supply activities – These provisions require that the licensee takes all reasonable steps to achieve the Standards of Conduct and apply the Standards of Conduct in a manner consistent with the Customer Objective of ensuring that each Micro Business Consumer is treated fairly. This condition was breached for the periods 26 August 2013 to 12 July 2015 (Breach 3) in relation to failure to communicate Principal Terms and 26 August 2013 to 14 August 2014 (Breach 4) in relation to Statement of Renewal letters.
  • SLC 7.6A(c) – Terms of Contracts and Deemed Contracts – These provisions state that a deemed contract must not require a customer to give any form of notice before they are able to change supplier, and were breached for the period 23 October 2013 to 9 June 2014 (Breach 5).
  • SLC 14 – Non-Domestic Customer Transfer Blocking – These provisions state that a licensee must not prevent a Proposed Supplier Transfer except in accordance with certain specific provisions, one of which being that the licensee’s Contract with that customer allows the licensee to prevent the transfer. Contract is a defined term within SLC 1 and the definition states that a Contract does not include a Deemed Contract. This SLC was breached for the period 14 November 2012 to 9 June 2014 (Breach 6).
  • Regulations 4 and 5 of the CHSRs. These regulations place requirements on regulated providers in relation to handling consumer complaints, and were breached for the period 1 January 2013 to 31 October 2014 (Breach 7).

BES admitted that it breached the relevant conditions and requirements set out above and co-operated with the Authority’s investigation. BES made improvements in those areas which were the subject of this investigation.

The investigation also looked at a potential breach of SLC 21B in relation to accurate billing, but there was no finding of breach in relation to this SLC.

The Authority decided to impose a financial penalty of £2 on BES (£1 on each licensee) for these contraventions.

The penalty takes into account the fact that BES agreed to pay £980,000 in total by way of settlement of this case.

This total figure includes compensation totalling £311,000 which BES has undertaken to pay to consumers affected by the breaches. BES has also made a consumer redress payment of £669,000 less the penalty sum of £2) to the charity, The Money Advice Trust (Business Debtline). This redress payment is to fund specific projects through which Business Debtline will provide debt advice services to business customers who are experiencing difficulties in paying their energy bills. BES has undertaken to make a second payment to this charity following completion of its arrangements for contacting and paying compensation to customers if there is any residual sum arising from circumstances where it was not possible to contact a customer due compensation.

BES also agreed to contact all those customers who have contacted them previously in relation to any matters relevant to Breaches 1 to 3 to explain its failings and to offer those customers the opportunity to terminate their contract, should they wish to, without a termination fee being imposed.