Record £12 million penalty handed to E.ON
Energy giant E.ON has been hit with a record £12 million penalty by regulator Ofgem over widespread mis-selling practices.
The energy watchdog said the hefty penalty was due to the company's "extensive" poor sales practices between June 2010 and December 2013 and its failure to train staff properly.
This led to customers being misinformed about tariff costs by doorstep and call centre sellers.
Ofgem said as a result it was likely that a "large" number of customers were mis-sold to during the three-year period.
E.ON, which co-operated fully with the investigation, will pay around £35 each to 333,000 pensioners and low-income families who normally receive the Warm Home Discount, and write to 465,000 customers informing them how to find out if they were mis-sold to.
The £12 million penalty is the largest ever handed out by the regulator to an energy firm.
E.ON chief executive, Tony Cocker, apologised for the failures and said changes to its sales process had already taken place.
"We are really sorry and want to make it absolutely clear that we're putting this right," he said.
"It is completely unacceptable that we may have been unclear with customers about their tariff choices and as a result those customers may not have made the best choices for them.
He added: "We are completely overhauling our sales operations and have already ended face-to-face sales, outbound residential telephone cold calling, and have revised and improved controls in our telesales operations."
Sarah Harrison, senior partner in charge of enforcement at Ofgem, 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."
Ofgem has handed out nearly £100 million in fines and redress on energy companies since 2010, including £39 million for mis-selling practices.
Do you think you have been mis-sold to? Contact the E.ON Compensation Fund on 0800 056 8497.
The practice of a dishonest salesperson misrepresenting or misleading an investor about the characteristics of a product or service. For example, selling a person with no dependants a whole-of-life policy. There have been notable mis-selling scandals in the past, including endowment policies tied to mortgages, employees persuaded to leave final salary pensions in favour of money purchase pensions (which paid large commissions to salespeople) and payment protection insurance. There is no legal definition of mis-selling; rather the Financial Services Authority (FSA) issues clarifying guidelines and hopes companies comply with them.