- Publication date
- 16th May 2014
- Information type
- Policy area
- E.ON’s large scale mis-selling results in biggest supplier payout to consumers
- Ofgem found management arrangements were insufficient to protect against mis-selling
- E.ON will make automatic payments to some vulnerable customers and has set up a sales compensation fund with a dedicated hotline
- E.ON has cooperated and shown willingness to make redress payments
E.ON has today agreed to pay £12m to vulnerable customers, after Ofgem’s 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, 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.”
As part of this 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.
Notes to editors
1. Summary of E.ON’s breaches
Ofgem’s investigation into E.ON’s sales practices found that E.ON:
- Provided misleading information
- Management did not take sufficient steps to ensure sales were compliant with energy sales rules
- Had poor auditing results and failed to act on those poor results
- Did not adequately train staff on selling energy
- Did not always give the key terms of a contract before the contract was agreed.
Breaches for both Telesales and Marketing were from June 2010 – December 2013. You can read the penalty notice on the investigations section of our website.
2. Information on redress package
Customers that believe they may have been mis-sold to can call the dedicated phone number. Customers can call E.ON directly on 0800 0568 497.
E.ON will deliver the £12 million through payments to customers identified under the Warm Home Discount Scheme. Payments will be made to recipients of the 2013/14 core and broader group. It is estimated that over 330,000 customers will receive a payment of around £35.
E.ON will make automatic payments to those vulnerable customers, listed on its Priority Service Register, who were potentially mis-sold to during the investigation period, June 2010 and December 2013.
3. About Ofgem
Ofgem is the Office of the Gas and Electricity Markets, which supports the Gas and Electricity Markets Authority, the regulator of the gas and electricity industries in Great Britain. The Authority's functions are set out mainly in the Gas Act 1986, the Electricity Act 1989, the Competition Act 1998 and the Utilities Act 2000. In this note, the functions of the Authority under all the relevant Acts are, for simplicity, described as the functions of Ofgem.
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