Npower to pay £3.5m after misleading consumers

Last updated: Dec 20th, 2013
News by Mark King
Hob and coin

Energy firm Npower is to pay £3.5 million, after energy regulator Ofgem found the firm had "breached energy sales rules on the doorstep and over the phone". The money will be used to help vulnerable consumers, Ofgem said.

The investigation found that Npower's sales processes had fallen short of the standards set by Ofgem's 2009 marketing rules, particularly at the point when customers were making decisions about whether to ditch their current supplier and switch to Npower.

In particular, Ofgem said Npower had not been gaining enough information about customers' consumption to enable them to make informed decisions on whether to switch. It had also failed to ensure that price comparisons between the price of its own supply and that of the customer's current supplier were fair.

It had also been giving inaccurate information on when customers would receive a direct debit discount and when the amount paid by direct debit could change.

The energy firm has accepted the findings and has agreed to pay £3.5 million which will directly benefit vulnerable consumers.

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Held to account

Sarah Harrison, Ofgem's senior partner in charge of enforcement, said: "Npower has done the right thing by stepping forward and recognising that, while it was making changes to improve its sales processes, weaknesses remained which affected consumers' ability to compare supplier offers fairly.

"These issues have been fully addressed by npower and Ofgem welcomes the company's actions and its agreement to pay £3.5m to directly benefit vulnerable consumers.

"Ofgem will continue to hold companies to account to ensure rules to protect energy consumers are met and that the market works for consumers in a simpler, clearer and fairer way."

Npower will make a payment of at least £25 to each of its current customers who receive the Warm Home Discount payments (in the form of a credit on their account or payment to top up a prepayment meter account).

Any excess from the £3.5 million will go into Npower's Health Through Warmth Crisis Fund, which provides financial help and support for vulnerable homeowners with long-term, cold-related illnesses who need heating repairs and installations that they cannot afford themselves. Beneficiaries do not have to be Npower customers to benefit from the scheme.