E.ON to pay record £12m mis-selling fine - Gas and electricity - News | moneyfacts.co.uk


Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

E.ON to pay record £12m mis-selling fine

E.ON to pay record £12m mis-selling fine

Category: Gas and electricity

Updated: 19/05/2014
First Published: 16/05/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

E.ON Energy has been ordered to pay a record penalty of £12 million following a mis-selling investigation by Ofgem, with the firm having breached energy sales rules on a large scale between June 2010 and December 2013.

The investigation found poor doorstep and telephone sales practices, sellers giving incorrect information, a failure to properly train staff and a lack of safeguards to protect consumers from such mis-selling, as well as insufficient attention paid to ensuring the company remained compliant with energy sales rules.

There was no evidence that senior management at the firm set out to deliberately mis-sell to customers, said Ofgem, however there wasn't enough done to identify any issues or rectify problems when they occurred.

Given the scale of the poor practice and the number of contracts signed in the 3½-year period, the regulator felt that a large number of customers could have been misled. It's this which has resulted in the firm being ordered to pay the biggest settlement so far, which could have been even bigger had E.ON failed to cooperate, it said in a statement.

However, the company has since acknowledged its failings and has "shown good cooperation throughout the investigation",
as well as making considerable changes to its sales processes to prevent consumers from being misled in the future, including putting a stop to doorstop selling and cold calling.

The package of measures agreed includes the following:

  • E.ON will pay around £35 each to 333,000 of their customers who are normally recipients of the Warm Home Discount, with this redress package intending to benefit pensioners, disabled and low income families.
  • It'll be required to make additional automatic payments to vulnerable customers who may have been affected by E.ON's poor sales practices.
  • It's had to set up a dedicated hotline (0800 0568 497) and will be required to compensate all consumers that it missold to.
  • It'll 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 missold to.

Those additional customers who were missold to would be entitled to receive compensation, putting them in-line for an average payout of £67 each – making the final bill to E.ON even higher.

Mark Todd, director of independent comparison site energyhelpline.com, commented on the latest mis-selling scandal: "It is truly shocking news that E.ON has admitted it's potentially missold to 435,000 customers, and that Ofgem is saying that E.ON sales staff routinely exaggerated the benefits of switching to the firm.

"Now five of the Big Six energy companies have been fined for misselling, this shows that the only safe place to switch energy is through an officially approved energy switching service."

What next?

Compare energy tariffs

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.