Ofgem to investigate four major power firms over ‘misleading’ sales techniques
Sales techniques used by major energy suppliers are set to be investigated by the energy watchdog it was announced today (September 2).
Miss-selling by four major energy suppliers, if proved, could result in ‘huge’ fines for the firms involved according to Ofgem.
Last October Ofgem introduced new rules forcing suppliers to introduce rules for preventing miss-selling to customers both in doorstep deals and over the phone.
And, if suppliers are selling contracts face to face they must provide customers with an estimate before any sales are concluded.
The new rules came in after Ofgem’s 2008 probe found 48% of gas customers and 42% of electricity buyers were ‘worse off’ after switching supplier on the doorstep.
Following the new rules Ofgem today launched investigations into four suppliers npower, Scottish Power, Scottish and Southern Energy and EDF Energy, to see if they’re all complying with obligations to sell correctly.
Ofgem’s senior partner for markets, Andrew Wright, said: “Suppliers have existing obligations to detect and prevent misselling and new licence conditions were brought in following our 2008 probe to further increase protection for customers.
“We expect all suppliers to comply with these tougher obligations but if our investigations find otherwise we will take strong action.”
Welcoming today’s announcement head of energy at Consumer Focus, Audrey Gallacher, said: “This is a welcome step by Ofgem to address years of customers getting a bad deal on energy prices on their doorstep.
“Complaints have declined since new rules came into effect this year, but suppliers still seem to be flouting the rules.
“Some customers are still being given misleading quotes and information, which leave them worse off when they switch provider.
“While many doorstep sales people will do a good job, the pay and rewards system continues to encourage miss-selling, despite years of regulation and voluntary initiatives.
“If better advice for customers and enforcement of the tougher rules doesn’t end the flagrant abuse of this form of selling, the big question will be whether it should be completely banned.”
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