Scottish Power to pay £8.5 million to energy customers following mis-selling
The energy giant Scottish Power has agreed to pay compensation direct to customers after an investigation found evidence of mis-selling on doorstops and over the phone.
Scottish Power has been ordered to pay £8.5 million to customers after an investigation by Ofgem.
The regulator found that between October 2009 and January 2012 Scottish Power had breached its marketing licence.
The energy giant didn’t have properly trained doorstop and telesales agents, which meant customers were misled about the savings that could be made by switching to Scottish Power.
Ofgem said Scottish Power agents had failed to give "accurate estimates of the annual charges that customers would pay and comparisons with their current supplier if they switched" and as a result "unreliable information" was given to customers.
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Changes
Scottish Power has accepted these failings and made changes to its sales process.
The company stopped doorstep sales in 2011 and has put in place checks to monitor the conduct of their telesales agents.
Ofgem said the size of the penalty reflected Scottish Power’s cooperation with the investigation and that it had not found a strategy at Scottish Power to deliberately mis-sell to customers.
Neil Clitheroe, ScottishPower’s CEO of energy retail and generation, said: “We accept Ofgem’s findings and we apologize unreservedly to those customers affected….Since 2011 we have taken determined steps to resolve the problem: doorstep selling was stopped; and all telephone sales staff are properly trained and monitored. Independent verification of our current sales process suggest that we are now doing a better job."
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Compensation
Scottish Power is creating a £1 million customer compensation fund for those who believe they have been mis-sold energy.
The firm has said it will write to all customers that are eligible for compensation.
But those that believe they have been impacted can also complete an online form (available here) or call 08450303048.
The remaining £7.5 million will be delivered to vulnerable customers identified as eligible for the Warm Home Discount Scheme.
Over 140,000 customers will get payments of around £50 by December 2013.
You can call the Warm Home Discount number (0845 030 3041) to see if you qualify.
Restoring trust
Sarah Harrison, Ofgem’s senior partner for enforcement said: "Today’s announcement is a clear signal to energy suppliers of the consequences of breaching licence obligations and of the importance of taking action to put things right for consumers when they go wrong."
Ofgem has concluded three mis-selling investigations since 2010.
In April this year SSE received a record fine of £10.5 million fine for prolonged and extensive management failures.
Investigations into npower and E.ON are still ongoing.
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Comments
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As some of the MP's who helped to privatise British Gas were rewarded with Directorships on the Board of Directors it is hardly surprising that they are totally biased and such bodies as OFGAS have no real teeth whatsoever. I agree with both the above comments. Of course the latest £2,000,000 bonus to just one of the British Gas Directors shows how much money has been made in profits. I am a British Gas shareholder (a few hundred only) and I want British Gas to lead the way by charging LESS even if that means that my dividend drops. The ordinary people in this country are having a tough time paying their energy bills (including us small shareholders). I am sorry but what is the point of perhaps "saving the planet" when we kill off the elderly or those who can no longer afford to pay these very inflated prices. If you charge less you keep your customers and therefore your profits - it just takes a little longer that is all. If you lose your customers then your business is gone. It will be an irony when I am forced to switch supplier even though I am a shareholder.
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It is nice to know that whatever energy giants have to pay out in compensation will be recovered by charging the rest of us even more. I would imagine that Scottish Power are already working out how much they need to increase prices to cover this £8.5 million shortfall in profits. The only loser is the consumer. Mind you, Ofgem has blasted energy giants about small print allowing them to increase the prices of fixed term contracts. 'Fix the cost of your gas and electricity until 2017 (but we reserve the right to change it as we see fit).' Obviously, they have been studying Sky and their practices, and decided to adopt this for energy pricing.
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Given that the energy industry is now a cartel - price differences between companies evaporate like Scotch mist, how is the energy company's agents supposed to make a living? If he or she tells you the truth - they don't make a sale, consequently they don't eat (commission is their meal ticket), so it is hardly surprising that they are going to be economical with the truth. In fact it would be difficult to devise a better scenario for encouraging mis-selling. It is beyond belief that Scottish Power senior management didn't know this was going on - even encouraged it (or their training staff did).
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22 October 2013