SSE fined record £10.5 million for mis-selling energy

Energy regulator Ofgem has fined Scottish & Southern Energy (SSE) £10.5 million for serious breaches in the way it sold gas and electricity over three years.

SSE has been fined £10.5 million by energy regulator Ofgem for mis-selling energy.

The fine has been imposed after evidence of numerous breaches were found in SSE’s telephone, in-store and doorstep sales of gas and electricity.

It’s the largest fine an energy supplier has received from Ofgem.

The regulator explained the size of the fine reflected the seriousness and duration of breaches as well as the harm caused and the likely gain SSE would have made.

In an official statement Ofgem said SSE was guilty of management failures that caused "prolonged and extensive mis-selling" and found failures at "every stage of the sales process".

Mis-leading sales

Ofgem said that it found evidence of SSE misleading customers on its charges and the comparison of costs with other suppliers.

The regulator said failings were apparent from the opening lines at the beginning of a sale right through to the confirmation process afterwards.

One example Ofgem provides is sales agents telling customers they would save money, but switching them onto a contract that was more expensive.

Another is disguising a saving on standing charge with higher first tier unit rates for the energy supplied.

Ofgem said that poor management enabled the mis-selling to happen, including the use of misleading sales scripts and failure to monitor sales activities.

SSE stopped doorstep sales in 2011 but the breaches of its licence continued in-store and over the phone.

Apologies

In response SSE chief executive Ian Marchant said: “ On behalf of the whole company, sorry.”

In his blog on the SSE website he admits the firm was slow to address shortcomings, but claimed things are changing. You can read more of the blog here.

Restoring trust

Sarah Harrison, Ofgem’s Senior Partner for enforcement said the move to fine SSE would help to “restore trust” in the energy market. She said:

“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.”

The SSE case is the second to conclude out of four investigations into energy companies launched in 2010.

Scottish Power and npower are still being looked into.

Since April 2010 Ofgem has completed 14 investigations and issued £35 million worth of penalties but only £6 million of compensation has been paid to customers.

Compensation

Unfortunately Ofgem does not have the power to force companies to award compensation to victims. Ofgem told the BBC that SSE's fine would be paid to the Treasury.

But SSE has a £5 million fund which has been reserved for those that believe they have been mis-sold energy.

Anyone who thinks they might be owed compensation should call the dedicated helpline on 08450707388.

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