Power giants in mis-selling probe

2nd Sep 2010 10:12

Four of the UK's 'big six' power suppliers could face hefty fines after industry regulator Ofgem launched a probe into the mis-selling of household gas and electricity contracts.EDF Energy, npower, ScottishPower and Scottish and Southern Energy are being investigated after renewed complaints about their telephone and door-to-door selling practices. British Gas, owned by Centrica, and E.On are not part of the investigation.The probe comes less than a year after Ofgem brought in new rules to crack down on the sale of contracts after it found over half of those who switched to supposedly cheaper suppliers ended up paying more. "We have received sufficient evidence to be a cause for concern. We had previously found enough serious failings to introduce tougher conditions on the suppliers. We are determined to stamp out mis-selling," a spokesman told reporters. The regulator gave no details of its evidence. Under its new rules, salesmen must give an estimate and comparison of before and after costs before any face-to-face sales deal is signed. Suppliers must also be seen to be actively preventing mis-selling to customers on the doorstep and over the telephone.Penalties for any companies found to have breached the rules can amount to up to 10% of annual revenues, a much tougher regime than previously. Under the old rules Npower was £1.8m in 2008 and the then EDF subsidiary London Electricity was fined £2m in 2002.Christine McGourty, director of Energy UK, which represents the leading gas and electricity companies, said: "The companies involved will collaborate fully with the Ofgem investigation and are awaiting further details from the regulator."