Investigation into SP's compliance with its obligations under SLC 25 (face to face and telephone sales activities) of the gas and electricity supply licences

  • Open
  • Decision proposed
  • Closed

The Gas and Electricity Markets Authority ("the Authority") has confirmed its decision to impose a financial penalty on Scottish Power for its failure to comply with Standard Licence Condition 25 of its electricity and gas supply licences with respect to telephone and face-to-face sales activities.

By way of background, 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, domestic suppliers are required 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 SP had failed to comply with various of their obligations in this regard over a protracted period, from October 2009 to January 2012.

The Authority found that for varying periods from when the relevant licence conditions came into force until January 2012 (the "Relevant Period"), SP failed:

  • to ensure through its management arrangements the provision of accurate estimates of the annual charges that customers would pay and comparisons with their current supplier if they switched to SP;
  • to calculate actual consumption or to provide a ‘best estimate’ of customers’ annual consumption resulting in unreliable information being provided to customers;
  • to adequately monitor the sales activities of external and in-house sales agents;
  • and to have in place appropriate management arrangements: issues with controls and training resulted in misleading claims being made during face to face and telesales marketing activities. 

The Authority considered it appropriate to impose a financial penalty for these contraventions. The Authority decided to impose a nominal financial penalty of £1 on ScottishPower. This is in addition to £8.5M that ScottishPower has agreed to pay in consumer redress in the form of compensation and payments to vulnerable consumers.

Further details can be found in the final penalty notice.