E.ON UK to pay record $20 mln compensation for mis-selling

LONDON Fri May 16, 2014 4:25am EDT

LONDON May 16 (Reuters) - E.ON UK, one of Britain's "big six" energy suppliers, will hand out 12 million pounds ($20 million) in compensation to vulnerable customers for mis-selling, the largest ever such payout by a UK energy firm, regulator Ofgem said on Friday.

E.ON UK, owned by Germany's E.ON, failed to properly train and monitor staff leading to incorrect information being provided to customers, Ofgem said.

Some 330,000 households, including pensioners, the disabled and low-income families, would receive a payment of about 35 pounds in a redress package, it added.

"The agreed redress package reflects the harm caused by E.ON's extensive poor sales practices carried out between June 2010 and December 2013," the regulator said.

Ofgem said it found no evidence that E.ON senior management had deliberately tried to mis-sell to customers. Because E.ON UK had agreed the compensation package, the regulator would only fine the business a nominal 1 pound, it added.

"We are really sorry and want to make it absolutely clear that we're putting this right," said E.ON UK CEO Tony Cocker.

"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."

Since 2010, Ofgem has imposed nearly 100 million pounds in fines and redress on energy companies for various rule breaches, including 39 million pounds for mis-selling tariffs.

The payouts will further damage the already rock-bottom reputation of the UK energy supply industry, and come a month after British Gas-owner Centrica was ordered to pay about 5.6 million pounds for blocking some business customers from switching supplier.

In December, RWE npower agreed to pay 3.5 million pounds to vulnerable customers for giving them inaccurate information between 2010 and 2012.

Regulators said in March that public trust was so low and competition was so weak in the sector that a full anti-trust investigation was required.

($1 = 0.5954 British Pounds) (Reporting by Michael Szabo and Paul Sandle; Editing by Mark Potter)