The Office of Gas and Electricity Marketing (Ofgem) has started an investigation into four of the 'big six'*** UK energy suppliers over concerns of the mis-selling of power contracts.The four, Npower, Scottish Power, Scottish and Southern Energy and EDF Energy are facing questions over whether their face-to-face and telephone sales of energy contracts breached the new sales rules. All four say they will work with Ofgem in resolving any issues.
Ofgem's senior partner for markets, Andrew Wright said "Suppliers have existing obligations to detect and prevent misselling and new licence conditions were brought in following our probe to further increase protection for customers. We expect all suppliers to comply with these tougher obligations but if our investigations find otherwise we will take strong action."
Under the new rules sales people are required to give the prospective customer estimated bills so that they can compare it with their current provider. But some customers it is reported are being given misleading quotes and information so that, after switching, they end up paying more.
Of course, the sales staff are still usually paid by results on the age old commission basis, so mis-selling will always be a temptation (just look at the financial services!) despite attempts to regulate it out.
Audrey Gallacher, head of energy at Consumer Focus, told the Express: 'This is a welcome step by Ofgem to address years of customers getting a bad deal on energy prices on their doorstep. Complaints have declined since new rules came into effect this year, but suppliers still seem to be flouting the rules. Some customers are still being given misleading quotes and information, which leave them worse off when they switch provider. While many doorstep sales people will do a good job, the pay and rewards system continues to encourage misselling, despite years of regulation and voluntary initiatives.Â If better advice for customers and enforcement of the tougher rules doesn't end the flagrant abuse of this form of selling, the big question will be whether it should be completely banned.'
The trouble is that if the client does not move providers (or at least threaten to) they get screwed, then if they do they get screwed. Either way screwed for their lack of knowledge. And most people will not do anything unless an easy to use system is placed before them, ie someone stands there with the information and paperwork and asks them to sign.
Then when they do switch the tariff changes at a later date so the customer gets screwed again.
It does not matter what regulators and companies do, people should always trust the old adage 'caveat emptor' (let the buyer beware) before all else.
The little guy does win sometimes.
***Big Six – British Gas, E.ON, Npower, Scottish Power, Scottish and Southern Energy and EDF Energy.