Government services minister, Bill Shorten, has called for “someone senior at AGL” to be held accountable for the company’s misuse of the Centrepay payment system to wrongly take money from the welfare payments of former customers.
On Thursday, the federal court imposed a record fine of $25m on AGL for receiving and retaining money from welfare recipients who had ceased being its customers.
They did so using Centrepay, a government-run system designed to help welfare recipients pay for essential services.
Guardian Australia revealed widespread failures of that system earlier this year, including that multiple energy retailers had allegedly used it to wrongly divert money from 483 welfare recipients who owed the company nothing.
Shorten described the case as a “very significant victory” for the Australian Energy Regulator, which brought the case against AGL.
He also described it as a “legal spanking” for AGL.
“We’ve seen some corporations, basically overcharging people, or garnisheeing people’s Centrelink when they shouldn’t have,” Shorten said on Friday.
“We’ve put in significant reforms in recent months to fix this problem for our most vulnerable Australians.”
“I hope someone senior at AGL is held accountable,” he said.
“AGL shareholders too should be given answers how this could happen.”
On Thursday, the company indicated the fine was larger than it had expected. It said it was considering an appeal on the penalty amount. But it apologised for the conduct in a statement to the ASX.
“AGL is disappointed that this issue occurred and apologises to the affected customers,” the company said. “Since the issue was identified by AGL in mid-2020, AGL has undertaken significant process enhancements to improve its handling of Centrepay payments.”
The court heard that AGL had failed to stop automatic deductions via Centrepay from customers that it knew had left and been issued a final bill.
It also heard that AGL had been caught in such conduct in 2013, years earlier, and had been told to cease by the federal government. It promised to do so, implemented fixes, but then removed those fixes in 2016. No one at the company had been able to explain why that occurred, the court heard.
But it allowed money to again be wrongly taken from welfare payments between 2017 and 2020. The federal court found more than 16,000 breaches of the national energy retail rules.
The AER chair, Clare Savage, said the ruling served as a warning to other energy retailers.
“The record $25m penalty reflects the seriousness of the breaches and serves as a warning that the AER expects all retailers to refund customers if they have been overcharged and to provide consumers the full protections afforded under the rules,” she said.
“The actions by AGL negatively impacted hundreds of people over an extended period, many of these may have been experiencing vulnerability.”
The AER is still considering potential enforcement action against three other energy retailers for similar alleged conduct.
