Financial News

  • 19 May 2014, 8:21

E.ON To Pay Customers 12m Over Mis-Selling

Energy giant E.On has been ordered to repay 12m to vulnerable customers, after the energy regulator discovered widespread mis-selling by its sales staff.

Ofgem said an investigation found the firm had broken energy sales rules between June 2010 and December 2013.

It said the company failed to properly train and monitor its own sales staff and third-party companies employed on its behalf.

Ofgem said E.On, which admitted the mis-selling, caused harm due to its "extensive poor sales practices".

The 12m payout is the largest ever imposed by the regulator on an energy company.

The regulator said it is likely a large number of customers were mis-sold products during the 42-month period.

Management failures were partly blamed for the mis-selling but Ofgem said senior staff did not set out to purposely deceive customers.

The regulator said the company would pay around 35 to some 333,000 customers who are normally recipients of the 'warm home discount'.

It would make automatic payments to some vulnerable customers who may have been affected.

E.On also agreed to set up a helpline and will write to 465,000 additional customers who may have been mis-sold contracts.

Ofgem said the company provided misleading information, operated lax management steps and discovered poor auditing results.

It said the firm failed to act on the audit results and did not always give key terms of a contract before completing sales.

Ofgem's senior partner in charge of enforcement Sarah Harrison said: 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.

"E.On has today taken a good step by accepting responsibility for its actions and putting proper redress in place."

E.On UK chief executive Tony Cocker told Sky's Eamonn Holmes: "I'm sorry and we really apologise to all of our customers.

"Particularly those customers to whom we may have given incorrect information when selling a tariff, or taking information from them.

"So that overall they were making a decision made on misleading information."

Mr Cocker earlier said 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 almost 100m in fines and redress on energy firms for rule breaches, including 39m for mis-selling.

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