Investigation into npower and its compliance with standard conditions 25 and 27 of the electricity and gas supply licences

Opened:
Sep 2009
Decision Proposed:
Dec 2013
Closed:
Feb 2014
Company:
npower
Regulation Area:
Sectoral Regulations

The Gas and Electricity Markets Authority ("the Authority") has confirmed its decision to impose a financial penalty on npower following an investigation into the company’s compliance with Standard Licence Conditions 25 and 27 of its electricity and gas supply licence with respect to telephone and face-to-face sales activities.

Following the Energy Supply Probe, Ofgem put in place a new version of standard licence condition 25 with a view to helping domestic customers make well-informed decisions in response to telephone and face-to-face sales activities. In particular, there are requirements for domestic suppliers to provide estimates and comparisons during face-to-face sales activities (with effect from 18 January 2010) and to secure the achievement of an objective in respect of both face-to-face and telesales activities (with effect from 21 October 2009). In summary, the objective requires domestic suppliers to take all reasonable steps to ensure information provided is complete and accurate, understandable, appropriate and not misleading, and that sales activities are conducted in a fair, transparent, appropriate and professional manner.

The Authority found that during the Relevant Period:

  • information provided to prospective consumers by npower during the course of both Marketing and Telesales Activities did not meet the Objective of SLC 25 (and npower breached SLC 25.2 in respect of both Marketing and Telesales Activities, and SLCs 25.6a and 25.7a in respect of Marketing Activities). This included information on: estimates of consumption, estimates of annual Charges and comparisons against customers’ current suppliers, information on how direct debit levels would be reviewed and when direct debit discounts would become payable;
  • npower did not take all reasonable steps to ensure that it used the best and most current information available when setting the level of direct debit payments (SLC 27.15);
  • npower did not take all reasonable steps in its training, monitoring, auditing and management arrangements to ensure that they were compliant with SLC 25.

The Authority considered it appropriate to impose a financial penalty for these contraventions. The Authority decided to impose a financial penalty of £1 on npower. This is in addition to £3.5 million that npower has agreed to pay in consumer redress in a fuel poverty package which directly benefits consumers. npower has also agreed to contact and refund certain customers by 28 February 2014 and to commence contacting other customers who may have suffered financial detriment by 31 March 2014.

Further details can be found in the final Penalty Notice.