Shell Energy Broadband Scraps Controversial Switching Exit Fee

Energy provider and UK ISP Shell Energy has announced that they will scrap the £15 “cease fee” that was being charged to home broadband customers who wanted to switch away to a different provider, including those who were now outside their minimum contract term.

Technically speaking Shell, or any ISP for that matter, can charge a post-contract cease fee and the one mentioned above does in fact appear in their T&C’s. In shells’ case it’s apparently a hang over from when they gobbled First Utility’s broadband base some years back, and sometimes wholesale providers can also charge ISPs such a fee too (i.e. the provider is allowed to recover these from consumers).

However, such fees should normally be made transparent to consumers at sign-up (i.e. not hidden in the small print). On top of that Ofcom generally takes a dim view of charges that could discourage switching (the modern preference is for such things to be recovered via the setup fee or monthly rental). As such very few ISPs will today charge a post-contract exit fee, but they were once quite common.

The good news is that pressure from MSE and Ofcom seems to have nudged Shell Energy to have a change of heart, although the ISP has yet to clarify when they will stop charging the cease fee. In addition, those who have already been hit by it will not be refunded. Meanwhile, Early Termination Charges (ETC) will also continue to apply to those who exit before their existing contract has ended, which is normal.

A Shell Energy Spokesperson said:

“The cease charge relates to a charge from our network partner which is passed through to customers. We’ve been reviewing this alongside all our policies, especially in advance of our acquisition of Post Office’s business, and we will be removing it going forward as we bring the two businesses together and absorbing the cost on behalf of our customers.”

Last month Shell Energy reached an agreement to acquire some 465,000 phone and broadband customers from the Post Office’s telecoms division (here), for an undisclosed sum (likely to be around £80m to £100m), and they probably don’t want anything like this to distract from that.