Energy News

npower fined £1.8million for doorstep mis-selling

Tuesday 23 December, 2008

By becca.talbot@consumerchoices.co.uk

Energy giant npower has been fined £1.8million after energy regulator Ofgem found its door-to-door salesmen had deceived customers and mis-sold gas and electricity contracts.

German-owned npower (www.npower.com), the UK’s fourth largest energy supplier, was fined £1.8million yesterday (22/12/2008) after Ofgem found the company guilty of failing to take sufficient action to prevent mis-selling of energy contracts to its customers.

The organisation found that npower breached a supply licence condition by failing to take adequate steps following complaints from customers about visits by the company’s doorstep salesmen.

Sarah Harrison, Ofgem’s managing director of corporate affairs, said: “This decision sends a clear message to energy suppliers that failing customers and falling short of the licence standards will lead to Ofgem action, as well as associated reputational damage.”

Harrison continued: “Mis-selling undermines consumer confidence, but getting it right on the doorstep can help customers make effective choices in the energy market.”

The Ofgem investigation was sparked by an undercover report in The Sunday Times, which claimed in April that some npower staff were persuading customers to sign forms without revealing that they were contracts and were giving misleading information.

npower, which has around 6.8 million customers in Britain, said in a separate statement yesterday that such behaviour would not be tolerated.

“We were very disappointed and concerned when we found out that back in April some sales staff were deliberately flouting our procedures,” said a spokesperson for the supplier.

“We set high standards and there is no place for this behaviour in our company so we immediately dismissed those who were acting fraudulently.”

npower said in response that it had improved its procedures since Ofgem launched its investigation, and said its doorstep staff were now obliged to validate their new sales through a special call centre.

The £1.8million fine, the third largest to be handed down by the regulator, would have been bigger had it not been for the prompt action taken by the company to address the issue once the investigation was launched.

Robert Hammond, from energy watchdog Consumer Focus said the fine showed npower and the existing code of practice on gas and electricity sales had failed customers. “We hope to see Ofgem closing loopholes that leave any consumer, but particularly the vulnerable, open to the misleading sales practices of rogue agents,” he said.

Chris Eagle, commercial manager at EnergyChoices.co.uk said: “This is a step in the right direction for Ofgem, and British consumers. If customers are given clear and impartial advice, it makes the decision to switch energy suppliers a lot easier, and can even save hundreds of pounds on energy bills.”

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