British Gas pays £20m for force-fitting prepayment meters

British Gas has agreed to pay £20m to settle a regulatory probe into the force-fitting of prepayment meters in customers’ homes without proper consent. The settlement, announced by Ofgem and reported by BBC and This is Money, covers compensation for households who had prepayment meters installed without consent and a penalty paid to the regulator.

What the settlement covers

The £20m figure includes direct payments to affected customers and a fine paid to Ofgem. BBC reports that the probe focused on British Gas’s practice of fitting prepayment meters in homes where customers were in debt, often without proper checks or consent. This is Money adds that the settlement avoids a full enforcement action, meaning British Gas does not admit liability but agrees to the payment and changes to its practices.

The regulator found that British Gas failed to follow rules requiring energy suppliers to assess vulnerability before fitting prepayment meters. The company must now compensate households and improve its processes. For homeowners, this shows prepayment meters cannot be forced on vulnerable customers, including those with medical conditions, young children, or elderly residents.

What this means for your energy bill and EPC rating

For the typical 3-bed semi in the UK, a forced prepayment meter can have hidden costs. Prepayment tariffs are often more expensive than direct debit, adding £50-£100 a year to bills. But the bigger issue for homeowners is the impact on Energy Performance Certificate (EPC) ratings. A prepayment meter does not directly affect an EPC, but the inability to pay for upgrades, such as insulation or a heat pump, can leave a property stuck at band D or E.

Grants like the Boiler Upgrade Scheme (BUS) and ECO4 require households to have a working heating system and reasonable energy efficiency. If a forced prepayment meter pushes a household into fuel poverty, they may struggle to afford the upfront costs of an eco upgrade, even with grants. The £20m settlement does not cover these wider costs, but it signals that regulators are watching how energy companies treat customers.

Who qualifies for compensation

British Gas has not yet released full details of who will receive compensation. BBC reports that the payment will go to households identified by Ofgem as having been wrongly fitted with prepayment meters. This is Money suggests that customers who were not given a proper affordability assessment or who had meters installed without consent may be eligible.

If you are a British Gas customer and had a prepayment meter fitted without your agreement, especially between 2020 and 2025, you should contact British Gas directly or check the Ofgem website for updates. The settlement is a one-off payment, not an ongoing discount, so affected households should act quickly to claim.

What this means for the wider energy market

The settlement is the latest in a series of actions by Ofgem against energy suppliers for poor practice. In 2023, the regulator banned forced prepayment meter installations for all suppliers after a scandal involving British Gas and other firms. This £20m penalty reinforces that ban and shows that Ofgem is willing to fine companies that breach it.

But the catch is that prepayment meters remain a tool for managing debt. Ofgem has not banned them entirely, only forced installations without consent. For homeowners, this means you still need to be vigilant. If you are in debt to your energy supplier, they may suggest a prepayment meter as a solution. You have the right to refuse if you can demonstrate vulnerability or if the meter would cause hardship.

Next steps for homeowners

If you are a British Gas customer and believe you were wrongly fitted with a prepayment meter, contact British Gas customer services or the Energy Ombudsman. Check if you qualify for compensation under this settlement. For all homeowners, the key takeaway is to know your rights: prepayment meters cannot be forced on you without a proper assessment.

If you are struggling with energy bills, consider applying for the Warm Home Discount or the Energy Company Obligation (ECO4) scheme, which can help with insulation and heating upgrades. These grants do not require a prepayment meter, and they can improve your EPC rating, reducing long-term bills.

Finally, if you are planning eco upgrades like solar panels or a heat pump, check your current meter type. If you have a prepayment meter, you may need to switch to a credit meter before installing some technologies. Contact your supplier to discuss options.