SSE fined a record £10.5 million

Energy watchdog Ofgem has given SSE a £10.5m fine after uncovering “prolonged and extensive mis-selling” by the gas and electricity provider. Ofgem believes the record penalty reflects the severity and duration of SSE’s failures which were found “at every stage of the sales process.” The watchdog blamed SSE’s management for the breaches, after they failed to make sure the company met its obligations regarding telephone, indoor and doorstep sales. These managerial shortcomings gave SSE’s sales agents free rein to mislead and entice new customers.

How did SSE mis-sell gas and electricity?

Between 2009 and 2011, customers were exposed to inaccurate statements and information about SSE’s charges, as well as misleading comparisons with other energy providers. In some cases, customers were persuaded to switch to SSE after being told they could save money, only to find that their energy bills actually went up. In one instance, a woman visited by an SSE sales agent was promised an annual saving of £177 if she switched to the supplier, but instead ended up paying £134 a year more on her new SSE tariff.

Some other examples of SSE’s mis-selling included:

  • One customer, who had switched to another supplier after SSE increased its gas prices by 9%, was later told that her new supplier had increased its prices by “14% combined,” thus making SSE more competitive. This was a false claim, as her new supplier had actually increased its gas and electricity prices by 7% each.
  •  Another customer was persuaded to switch to SSE on the basis of a competitive £81 monthly direct debit. However, the direct debit was set too low to accommodate her annual usage, and so the customer would have ended up owing the company £100 after the first year.
  • Doorstep salesmen in northern England were told to use a sales script which inaccurately described how “a government thing called deregulation… results in your energy prices being lowered by doing nothing at all.”

How has SSE responded?

SSE’s boss Ian Marchant apologised “on behalf of the whole company” via the company blog, saying “we have failed to live up to our own standards… there is no excuse”. The company has reformed its sales tactics since the mis-selling took place, and has so far paid out £400,000 to affected customers from its £5m compensation fund. SSE has also promised that its £10.5m fine will not be passed onto its customers, and has docked the bonuses of its directors.

How will this news affect the energy market?

Ofgem’s verdict on SSE will undoubtedly be a worry for rival energy companies currently under investigation for mis-selling. The energy watchdog has a record of punishing bad practice with big fines, including the £4.5m handed to EDF last year for making misleading sales claims to customers. In fact, according to the Herald Scotland, Ofgem had initially hoped to fine SSE £50m, but was forced to settle for the £10.5m figure when it faced contention with SSE’s legal team.

For many of us, Ofgem’s findings will just add to a long list of reasons not to trust the energy companies. Also, when considering that SSE made £1.3bn in profit last year, a lot of us will think the £10.5m fine pales a little in comparison. However, we can take comfort in the fact that Ofgem has sent out a loud and clear message to the energy market, reminding companies that customers come first… or else.

If you feel you may have been mis-sold one of SSE’s contracts, you can make a claim by calling 0845 0707 388.