Member Article

E.ON to pay £12 million package following Ofgem misselling investigation

E.ON’s large scale misselling exposed by Ofgem has resulted in the biggest supplier payout to consumers.

E.ON has apparently cooperated and shown willingness to make redress payments, agreeing to pay £12 million to vulnerable customers, after Ofgem’s investigation found it had broken energy sales rules, finding that management arrangements were insufficient to protect against misselling

E.ON will make automatic payments to some vulnerable customers and has set up a sales compensation fund with a dedicated hotline

The agreed redress package reflects the harm caused by E.ON’s extensive poor sales practices carried out between June 2010 and December 2013.

Given the large number of contracts signed in this period it is likely a large number of customers were missold to by E.ON and Ofgem took this into account when agreeing the redress package.

Ofgem’s investigation found no evidence that E.ON’s senior management set out to deliberately missell to customers, but did find that management did not do enough to identify issues or act on problems when discovered.

Ofgem’s investigation found that E.ON failed to properly train and monitor both its own staff and those it employed through third party telesales agencies, leading to incorrect information being provided to customers on the doorstep and over the phone, which could have misled customers.

The investigation also showed failures in E.ON’s management arrangements meant that insufficient attention was paid to ensuring compliance with energy sales rules.

E.ON has acknowledged these failings, made considerable changes and improvements to its processes, including ceasing to use the third party agencies involved, and shown good cooperation throughout the investigation. Had this not been the case, Ofgem said that the penalty would have been higher.

Sarah Harrison, Senior Partner in charge of enforcement said: “Since 2010 Ofgem has imposed nearly £100m in fines and redress on energy companies for various rule breaches, including £39 million for misselling, and introduced radical new reforms to make the market simpler, clearer and fairer for consumers.

“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. E.ON has today taken a good step by accepting responsibility for its actions and putting proper redress in place.”

Edward Davey, secretary of state for Energy and Climate Change, said: “It’s right that if energy companies aren’t fair to their customers, then they’re penalised – and their customers benefit.

“That’s why we introduced legislation to ensure Ofgem can take tough action in these cases, including making the company pay compensation to the people affected.”

This was posted in Bdaily's Members' News section by Clare Burnett .