E.ON has agreed to pay £12m to vulnerable customers after an Ofgem investigation found it had broken energy sales rules. E.ON has also committed to compensating any customer that it mis-sold to, including automatic payments to some vulnerable customers.
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 mis-sold 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 mis-sell 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 the penalty would have been higher.
Sarah Harrison, OFGEM 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 £39m for mis-selling, 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.”
In response to the Ofgem mis-selling fine, Energy UK said: “The energy industry never condones mis-selling and is working to put the focus firmly on the customer. The energy industry is well aware of problems it has had and continues to make great strides in improving standards.
“The mistakes are being dealt with, door-step selling has stopped, and tariffs are simpler and clearer. The benefits of switching are easy to check with new information on bills so people can readily compare one tariff with another.
“The industry knows that it must improve customer relationships and continue to work to regain customer confidence. We also believe the referral of the market to the competition authorities, has a positive part to play.”
As part of its compensation package E.ON has agreed to:
- Pay around £35 to 333,000 of their customers who are normally recipients of the Warm Home Discount. This redress package will benefit pensioners, disabled and low income families
- Additionally, make automatic payments to some vulnerable customers who may have been affected by E.ON’s poor sales practices
- Set up a dedicated hotline 0800 0568 497 and compensate all consumers that it mis-sold to
- Write to around 465,000 customers it has identified through its redress work, informing them of how to get in touch to find out whether they were mis-sold to.