3 April 2013

Record fines for SSE mis-selling energy

Regulator Ofgem announced a record £10.5m fine for mis-selling by big six energy company SSE.

Energy regulator Ofgem has issued a record £10.5m fine to SSE for mis-selling. Ofgem found numerous breaches of SSE's obligations under telephone, in-store and doorstep sales activities.

Ofgem say they found failures at every stage of SSE's sales process over a prolonged period of time. In particular they found that SSE consistently failed to provide clear and accurate information on prices and potential savings to enable customers to make informed decisions about switching suppliers.

The scale of the fine reflects not only the duration and extent of the mis-selling but also the harm done to their customers and gains made by SSE.

Ofgem do not currently have powers to force energy suppliers to compensate customers, though their powers are being increased with the current energy bill. However, possibly as part of their negotiations with Ofgem over the level of fine, SSE have set up a £5m misselling fund and dedicated complaints line: 0845 0707 388.

Alan Young, managing director of corporate affairs apologised on this morning's Today program saying "we are very sorry about the breaches that occurred and we do want to apologise.”

Ofgem say the failures, through all their sales channels, included:

• telling customers they would save money when they were actually switched to a more expensive contract
• telling customers they would save more than was actually possible
• deliberately setting direct debit payments too low so the tariff appeared better value than it was and the customer was left in debt
• making false statements about competitors

The mis-selling wasn't just down to "overenthusiastic” sales reps making exaggerated claims, many of the failures were with management arrangements including:

• use of misleading scripts
• commission was paid to people who audited doorstep sales making them benefit from allowing mis-selling
• failure to adequately monitor sales activity
• failure to provide accurate estimates of SSE charges and comparisons with competitors
• failure to take into account all relevant information when estimating a customer's annual energy consumption
• not having a contract in place with a telesales subcontractor

For a clear unbiased view of which energy tariff is best for you, use a comparison service accredited to the Consumer Focus Confidence Code like the MoneyMaxim energy comparison service.