Another energy scandal: E.ON fined £12m for mis-selling to ‘vulnerable’ customers

16th May 2014

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Energy giant E.ON has been fined £12 million for mis-selling to hundreds of thousands of ‘vulnerable’ customer, including pensioners.

Ofgem, the energy watchdog, has slapped E.ON with the fine after it found multiple failings in the way gas and electric contracts were sold leading to ‘large scale’ mis-selling and oversight by management, which did not train or monitor sales staff effectively.

An investigation by Ofgem found E.ON had broken energy sales rules between June 2010 and December 2013. Although the watchdog said there was no evidence that E.ON’s senior management set out to deliberately mis-sell to customers neither did they identify bad practice or act on it when it was discovered.

This includes a failure to properly train and monitor staff and those employed through third-party telesales agencies which cold-called customers. Sales staff gave ‘vulnerable’ customers, including pensioners, disabled people and low income families, incorrect information about their energy tariff choices meaning they ended up paying too much.

On top of the fine, E.ON will now pay around £35 to 333,000 customers who would normally receive the Warm Home Discount from the company because of their financial circumstances or reliance on benefits. It will also make automatic payments to some customers who may have been affected by E.ON’s poor sales practice and write to 465,000 customers who may have been mis-sold to.

The £12 million fine is the largest the regulator has levied and follows a £3.5 million penalty on Npower that was handed out in December for mis-selling.

Sarah Harrison, senior partner in charge of enforcement at Ofgem, said: ‘Since 2010 Ofgem has imposed nearly £100 million in fines and redress on energy companies for various rule breaches, including £39 million for mis-selling…the time is right to draw a line under past supplier bad behaviour and truly rebuild trust so consumers are put at the heart of the energy market.’

The fine will do little to enhance the reputation of energy companies, which have already been accused of profiteering from soaring energy bills that have left consumers worried about the cost of heating their homes.

Tony Cocker, chief executive of E.ON UK, apologised to customers and said the company is ‘putting this right’.

‘It is completely unacceptable that we may have been unclear with customers about their tariff choices and as a result those customers may not have made the best choices for them,’ he said. ‘There was no organised attempt to mislead…but that does not excuse the fact we did not have in place enough rules, checks and oversight.’

He added that the company was ‘completely overhauling’ its sales arm and has ‘already ended face- to-face sales’ and ‘outbound residential cold calling’.

E.ON customers who believe they have been mis-sold to can contact the helpline on 0800 0568 497.

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