LONDON, April 3 British utility SSE has
been fined 10.5 million pounds ($15.9 million) for mis-selling,
the largest fine the regulator has ever imposed on an energy
Ofgem said on Wednesday it had found failures relating to
telephone, in-store and doorstep sales at SSE "at every stage of
the process", including at management level.
"The level of fine reflects the seriousness and duration of
breaches, the likely substantial harm that they have caused and
the likely gain to SSE," it added.
The fine is a sign that the government and regulator are
taking more aggressive action against energy companies that are
found to have misled customers, adding to already high retail
Ofgem said SSE - which provides gas, electricity, phone and
broadband for households - had made misleading and inaccurate
statements to customers in order to make a sale.
Examples it gave included telling customers they would save
money but switching them to a more expensive contract and
telling them competitor price increases were higher than they
Newly appointed Energy Minister Michael Fallon said that he
had "rarely seen a worse case of consumers being misled so
Although SSE's management had not willfully breached licence
conditions, Ofgem said that the board paid insufficient
attention to compliance and it was not a high priority for it.
"SSE is deeply regretful that breaches occurred and
apologises unreservedly to any customers who have been affected
by sales activity which ran counter to the values and culture of
the company," SSE said.
It said it had already taken action to remedy the issues
raised, including stopping doorstep selling, bringing telesales
in-house, and training and restructuring.
SSE has already been fined 1.25 million pounds for doorstep
mis-selling by the courts. It has earmarked 5 million pounds to
reimburse customers who felt they have been misled.
It has paid out around 400,000 pounds of this so far.
Energy Minister Fallon, who replaced John Hayes last week
, said that the government's planned Energy Bill
would give Ofgem the teeth it needed in future to get
compensation to those directly affected.
"We're using new legislation to require suppliers to
simplify their tariffs and get rid of historic poor deals," he
End-user lobby group Consumer Focus warned that SSE was not
the only energy company that had broken rules.
"This is not a case of one bad apple or one rogue sales
team. Other companies have also broken direct selling," Consumer
Focus said in a statement.
"While the situation has got better...the recent history
casts a long shadow and Ofgem are right to take this scale of
action," the group added.
The regulator has also launched investigations into selling
practices by SSE, EDF, RWE's npower and
Ibedrola's Scottish Power in 2010, and by E.ON in 2012.
Last year, EDF paid out 4.5 million pounds to help
vulnerable consumers after Ofgem found it had breached some
licence conditions in its sales and marketing.
The investigations into npower and Scottish Power are