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MPs call for energy mis-selling compensation

MPs call for energy mis-selling compensation

Category: Gas and electricity

Updated: 29/07/2011
First Published: 25/07/2011

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 It is now over 6 months old so the content may be out of date.

A group of MPs has heaped pressure on energy firms to pay compensation to customers that were mis-sold gas and electricity deals by doorstep sellers.

The Energy and Climate Change Committee has also called on all energy companies to halt doorstep selling, saying they should 'ditch the Del Boy sales tricks'.

The influential group said that it is concerned that customers have been pressured into switching supplier on the doorstep without proper consideration of the options when confronted with the vast array of tariffs on offer and a hard sell.

In the last 18 months alone, the number of tariffs available to consumers has increased from around 180 to almost 400.

And figures from Ofgem suggest that up to 40% of consumers who switch do not end up with a better deal.

"There is mounting concern in Parliament about the doorstep selling techniques of large energy companies," said Tim Yeo MP, chairman of the Committee.

"If it turns out that consumers are being persuaded to switch contracts when it's not in their best interests, by salespeople keen to earn commission, then it would only be right for the energy companies to cough-up compensation.

"Scottish & Southern Energy recently announced that it would suspend doorstep selling following its hearing in front of the Select Committee, we welcome that decision.

"The rest of the Big Six should ditch the Del Boy sales tricks and concentrate on giving customers the information they need to choose the correct contract."

The report also raises concerns about the propensity for energy prices to 'rise like a rocket and fall like a feather', the growing complexity of tariffs and the market dominance of the 'Big Six' vertically integrated energy companies.

The big six energy firms hold over 99% of domestic accounts in the UK .

The MPs singled out recent price increases from Scottish Power for particular criticism.

Customers who use the least energy will be hit the hardest from August when the increases are put into effect providing an apparent incentive for higher consumption - when energy companies are now supposed to be helping consumers become energy efficient.

"Electricity and gas tariffs are now so complex that even the Energy Minister admitted he got confused when trying to switch," Mr Yeo added.

"We are worried that a lot of people are simply bamboozled by their bills and the vast array of different tariffs on offer.

"The industry should address these problems immediately without waiting for Ofgem or the Government to act."

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