Investigation into Economy Energy’s compliance with its obligations under the gas and electricity supply licences (Standard Licence Conditions 23, 24 and 25)

Opened:
Sep 2014
Decision Proposed:
Nov 2014
Closed:
Dec 2015

The Authority has confirmed its decision to impose a financial penalty on Economy Energy following an investigation into its compliance with a number of relevant conditions set out in SLCs 23, 24 and 25. 

We launched our investigation in response to a referral from Consumer Futures. The investigation considered whether Economy Energy complied with its licence conditions when marketing gas and electricity to its customers pre February 2014. 

The provisions of SLC 23 and 25 govern the notification of domestic supply contract terms and the marketing of gas and electricity to domestic customers.

Under SLC 23.1, suppliers must take all reasonable steps to communicate the principal terms of their contract to the customer before they enter into it. Under SLC 23.3 and SLC 23.4, suppliers are required to give customers at least 30 days’ notice of a price rise allowing customers the chance to terminate the contract without incurring exit fees and switch before the increase takes effect.

Under SLC 25.1 and SLC 25.2, suppliers must ensure all information they give to customers in the course of their marketing activities and/or its telesales activities is:

  • complete and accurate and is capable of being easily understood; and
  • not misleading and fair in its content and how it is presented.
  • They should also ensure their representatives behave in a fair, transparent, appropriate and professional manner.

Under SLC 25.6, SLC 25.7 and SLC 25.8, suppliers must provide a written estimate of the total annual charges before entering into a contract with a customer in the course of their marketing activities. Where a comparison with another supplier is made, a best estimate of comparable charges should be provided with any differences explained clearly.

Under SLC 25.5, customers should be able to understand they have entered into a contract with a supplier. Therefore, suppliers must ensure their representatives readily identify themselves to customers. Suppliers must put in place and follow appropriate procedures for the selection and training of sales staff who are engaged in communicating with customers for the purposes of their marketing activities.

Under SLC 25.16, suppliers should take all reasonable steps to ensure the management arrangements they put in place help them comply with their licence obligations.

Economy Energy has admitted that it breached the SLCs listed above. The investigation also looked at whether Economy Energy incorrectly charged exit fees (SLC 24.3) and whether it provided written estimates to customers (SLC 25.9). There was no finding of breach in relation to these SLCs.

The Authority has confirmed its decision to impose a financial penalty of £1. This is in addition to £250,000 (less £1) that Economy Energy has paid to Citizens Advice. This redress payment will be used towards the Energy Best Deal Extra Prepayment Meter project, the aim of which is to provide advice and information to vulnerable consumers with prepayment meters. Economy Energy will also take further steps to trace and refund customers who lost out financially as a result of either being mis-sold contracts or not being advised of price increases. Economy Energy has also paid unclaimed monies to the National Children’s Bureau.