British utility SSE fined £10.5m

BRITISH electricity and gas utility SSE was yesterday fined £10.5m for mis-selling, the largest fine the regulator has imposed on an energy supplier.

BRITISH electricity and gas utility SSE has been fined £10.5m for misselling, the largest fine the regulator has imposed on an energy supplier.

Ofgem, the Office of Gas and Electricity Markets, said yesterday it had found failures relating to telephone, in-store and doorstep sales at SSE “at every stage of the process”, including at management level.

“The level of fine reflects the seriousness and duration of breaches, the likely substantial harm that they have caused and the likely gain to SSE,” it said.

The fine is a sign that the government and regulator are taking more aggressive action against energy companies that are found to have misled customers, adding to already high retail energy prices.

Ofgem said SSE — which provides gas, electricity, phone and broadband for households — had made misleading and inaccurate statements to customers to make a sale. Examples included telling customers they would save money but switching them to a more expensive contract and telling them competitor price increases were higher than they actually were.

“Ofgem’s findings show SSE failed its customers, mis-sold to them and undermined trust in the energy supply industry,” Ofgem senior partner in charge of enforcement Sarah Harrison said.

Newly appointed Energy Minister Michael Fallon said he had “rarely seen a worse case of consumers being misled so badly”.

Although SSE’s management had not wilfully breached licence conditions, Ofgem said the board paid insufficient attention to compliance and that it was not a high priority for the board.

“SSE is deeply regretful that breaches occurred and apologises

We’re using new legislation to require suppliers to simplify their tariffs and get rid of historic poor deals

unreservedly to any customers who have been affected by sales activity which ran counter to the values and culture of the company,” the utility said. It said that it had already taken action to remedy the issues raised, including stopping doorstep selling, bringing telesales in-house, and training and restructuring.

SSE has already been fined £1.25m for doorstep mis-selling by the courts. It has earmarked £5m to reimburse customers who felt they have been misled. It has paid out about £400,000 of this so far.

Mr Fallon, who replaced John Hayes last week, said the government’s planned Energy Bill would give Ofgem the teeth it needed in future to get compensation to those directly affected. “We’re using new legislation to require suppliers to simplify their tariffs and get rid of historic poor deals,” he said.

Lobby group Consumer Focus warned that SSE was not the only energy company that had broken rules. “While the situation has got better … the recent history casts a long shadow and Ofgem are right to take this scale of action.”

The regulator has also launched investigations into selling practices by SSE, EDF, RWE’s npower and Ibedrola’s Scottish Power in 2010, and by E.ON last year.

Last year, EDF paid out £4.5m to help vulnerable consumers after Ofgem found it had breached some licence conditions in its sales and marketing. The investigations into npower and Scottish Power are continuing. Reuters