Regulator clamps down on energy mis-selling

Gas and electricity supplier SSE has been fined £10.5million by the regulator Ofgem for misleading people about how much they could save.

17:40 08 April 2013

It's the largest fine Ofgem has ever imposed on an energy supplier, which cited a series of management failures at SSE that led to "prolonged and extensive mis-selling".

 

Here's a closer look at why SSE has been fined, how you can get compensation and what to do if you're unhappy with your current provider or tariff.

 

'Substantial harm'

 

SSE's sales staff made misleading and unsubstantiated claims about savings on the phone, in stores and on people's doorsteps, according to Ofgem.
The regulator says the level of the fine reflects "the seriousness and duration of the breaches, the likely substantial harm that they have caused and the likely gain to SSE".

 

Its investigation found failings at all stages of SSE's sales process, including the "opening lines on the doorstep, in-store or over the phone through to the confirmation process which follows a sale."

 

SSE particularly and consistently failed to provide potential customers with clear and accurate information on prices and savings, which would have influenced their decision to switch to the supplier. Doorstep selling stopped in July 2011, but SSE continued mis-selling over the phone and in stores.

 
Sarah Harrison, Ofgem's Senior Partner in charge of enforcement said: "Ofgem's findings show SSE failed its customers, mis-sold to them and undermined trust in the energy supply industry."

 

"Today's fine sends a clear message to suppliers that Ofgem will hold to account those companies which fail to treat consumers fairly. It is time for the energy industry to take note and get behind Ofgem's reforms to rebuild trust and make the market simpler, clearer and fairer for consumers."

 

In a statement, the energy supplier said "SSE is deeply regretful that breaches occurred and apologises unreservedly to any customers who have been affected by sales activity."

 

Ofgem doesn't have the power to force SSE to reimburse these customers - the actual fine will be paid to the Treasury - but the supplier says it has already started a scheme to compensate the victims of the mis-selling.

 

The regulator says it will have greater powers to take targeted action against companies breaching their licences once the Energy Bill is introduced.
The SSE mis-selling investigation was the second of four launched by the regulator in 2010. It fined EDF Energy £4.5million in March last year for breaching marketing rules. Ofgem continues to investigate Scottish Power, E.on and Npower.

 

Clare Francis, editor-in-chief at MoneySupermarket, said: "This is a great day for consumers. SSE's fine may not seem huge but it sends a clear signal - energy firms have treated customers unacceptably and now it's time to put things right."

 

"It's good to see that the regulator is taking measures to clean the industry up. It underlines the message that consumers don't have to put up with poor service. They can complain and then vote with their feet by taking their custom elsewhere."

 

I was mis-sold an SSE product, what can I do?

 

According to SSE, all customers who may have been "financially disadvantaged" as a result of the mis-selling should now have received a letter about the introduction of the company's new Sales Guarantee.

 

Under the guarantee, SSE is setting aside £5million to compensate "any household customer who shows that they switched their energy supply to SSE after being given inaccurate information or being misled will have any resulting financial loss made good."

 

SSE says the guarantee has been independently reviewed and audited, promising that the compensation scheme will be "fair and reasonable".
The supplier says it's already paid out £400,000 to reimburse customers since early last year.

 

If you've been affected but haven't received your letter or want to speak to SSE about the compensation, you can contact its dedicated team on 0800 975 3341.

 

I'm unhappy with my supplier, what can I do?

 

If you feel like you're paying too much for energy, or you're just unhappy with your supplier's service, you can switch to a new supplier in just a few simple steps.

 

You can see how much could save by switching to a new supplier with our energy comparison service here. It only takes a few minutes, it's free to use and you're under no obligation to switch - so you might as well have a look to see what else is on offer.

 

Alternatively, you can speak to someone about switching on the phone on 0800 177 7861 (Freephone) or use our new live chat service on our gas and electricity comparison page here.

 

The fact is, unless you're a really keen switcher and it's not been long since you last switched your supplier or tariff, there's a good chance you'll save money by switching - as I explain in my article Who should switch to save on energy bills?.

 

If you've done a comparison and decided that for the amount you'll save it isn't worth the hassle of switching, then think again. Switching suppliers is just a matter of filling in a couple of forms - as the new supplier will sort out the switch with your current supplier.

 

They take care of the legwork, which means the only difference you'll notice is that your new, lower bills start coming from a different company. Your supply won't be interrupted and nobody is going to come to your home to dig up any pipes - the whole process can be finished within four to eight weeks.

 

If you think you're paying too much or you're unhappy with your provider, see how they measure up against their rivals, and then vote with your feet.