E.ON has joined the ranks of companies made to repay millions of pounds to customers by British courts, after an investigation revealed widespread product mis-selling. The penalty is thought to be the largest levied by UK energy regulator Ofgem.
Up to 333,000 customers – described as E.ON’s most ‘vulnerable’ – will receive £35 compensation for energy products sold between 2010 and 2013. These repayments, amounting to £12m, are for customers who bought into E.ON’s Warm Home Discount.
Ofgem has stipulated the initial repayment of £12m after an investigation revealed ‘E.ON’s extensive poor sales practises carried out between June 2010 and December 2013.’ According to Ofgem’s statement, the regulator was compelled to investigate E.ON’s sales practices because the high numbers of new contracts signed during that period indicated potential mis-selling.
[H]igh numbers of new contracts signed during that period indicated potential mis-selling
The investigation concluded that E.ON failed to adequately train and monitor its staff and those employed via third parties, which resulted in incorrect information being provided to customers. There were also failures in E.ON’s ‘management arrangement’ which meant ‘insufficient attention was paid to ensuring compliance with energy sales rules.’ However, the 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.’
E.ON’s final bill can still increase once it has finished paying compensation to a further 465,000 customers – identified in an internal investigation – who could be entitled to repayments of £67 each. This would add up to £8m to the company’s final bill.
“It is completely unacceptable that we may have been unclear with customers about their tariff choices and as a result those customers may not have made the best choices for them,” said Tony Cocker, E.ON CEO, in a statement. “There was no organised attempt to mislead, and Ofgem has acknowledged this, but that does not excuse the fact we did not have in place enough rules, checks and oversight.”
Since 2010, Ofgem has imposed nearly £100m in fines and compensation orders. “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,” said Sarah Harrison, Senior Partner in Charge of Enforcement said. “E.ON has today taken a good step by accepting responsibility for its actions and putting proper redress in place.”