The energy regulator Ofgem found that British Gas installed prepayment meters without consent in some homes between 2018 and 2021, including properties deemed vulnerable.

The findings followed a lengthy investigation by the regulator, which has described the case as one of its most complex to date.

Tim Jarvis, chief executive of Ofgem, said: “It is clear that British Gas fell short in its treatment of an unacceptable number of vulnerable customers who had a prepayment meter installed without consent, and it’s right that they’ve taken action to put things right.

“Because of our action customers will receive a substantial package of redress, compensation and debt write off.”

As part of the settlement, British Gas will write off up to £70 million of energy debt for vulnerable customers.

The £20 million compensation covers customers who were impacted between 2018 and 2021, in addition to payments already made to those affected in 2022 and 2023.

Chris O’Shea, group chief executive of Centrica, which owns British Gas, said: “What happened should never have happened, and I am sorry to the prepayment customers who were affected.

“When we get things wrong, we make them right.

“When these issues came to light in 2023, we apologised, stopped the activity immediately and took rapid action to improve our processes and change how we engage with customers in debt, particularly those in vulnerable situations.

“Over the last three years, we have treated this matter with the seriousness it deserves and have made changes to our practices and put safeguards in place to ensure we deliver the standards our customers have every right to expect.”

Simon Francis, coordinator of the End Fuel Poverty Coalition, added: “British Gas has finally been held to account for the forced pre-payment meters scandal.

“The results of the Ofgem investigation are truly shocking.

“They have confirmed that British Gas knew about these failings as far back as 2018, was warned again in 2021, and still did not take adequate action.

“That means the firm knowingly forced prepayment meters onto customers, potentially including those with disabilities and families with young children.

“While the £20 million fine, combined with up to £70 million in debt write-offs, is a significant outcome to the investigation, it should not be mistaken for the end of this story.”