Probe launched into energy companies' "mis-selling"

City A.M. Reporter
Energy regulator Ofgem is launching an investigation into whether four of the big gas and power suppliers are mis-selling products to customers.

Ofgem's probe will determine if EDF Energy, RWE Npower, Scottish and Southern Energy, and Iberdrola's Scottish Power are complying with obligations brought in last October which were aimed at preventing households being mis-sold energy contracts.

"Suppliers have existing obligations to detect and prevent mis-selling and new licence conditions were brought in following our probe to further increase protection for customers," Andrew Wright, Ofgem's senior partner of markets, said.

Consumer protection groups welcomed the investigation and said current practices still encouraged utilities to mis-sell products.

"Some customers are still being given misleading quotes and information, which leave them worse off when they switch provider," Audrey Gallacher, Head of Energy at Consumer Focus, said.

"While many doorstep sales people will do a good job, the pay and rewards system continues to encourage mis-selling, despite years of regulation and voluntary initiatives."

Ofgem fined Npower £1.8m in 2008 for mis-selling, and London Electric (now part of EDF Energy) £2m.