British Gas has backed down on charging late payers a £5 fee after customers complained.

British Gas announced last month that those who paid their bills late would be charged a penalty from this month. But in an unexpected U-turn, the company has scrapped its plans.

Phil Bentley, Managing Director of British Gas, said today: "At British Gas, every customer counts and as the new Managing Director I’ve been listening to their views about a late payment charge. The vast majority of customers pay their household bills on time and so to ease their concerns about a late payment charge I’ve decided to scrap it."

Consumer groups welcomed the move. Audrey Gallacher, of energywatch, said: "This is a real victory for consumers and for common sense. energywatch made strong calls for British Gas to ditch its proposed £5 penalty charge and we're pleased the company has listened and made this u-turn."

Karen Darby, of SimplySwitch.com, the energy price comparison website, said: “It’s good news that British Gas has dropped its late payment charge before it took hold. It was a brave move to introduce the penalty in the first place given they were the only energy company to do so. Consumers have shown British Gas that they weren’t happy and they have made a u-turn and dropped the charge.”

But Mr Bentley vowed that late-payers would not escape settling their bills. He said: "This does not mean I’m going soft on the small minority who continually pay their bills late - it costs us £20 million each year which in effect places a burden on those customers who do pay their bills on time - and we will be more rigorous than ever to pursue these amounts owed."

Mr Bentley will be answering your questions on British Gas on Wednesday at 2pm. To read his responses to queries and complaints about customer service, visit the weblog