/ Home & Energy

Eon fined £12m for mis-selling – were you affected?

Eon

The latest in a long line of embarrassing episodes for the UK’s big energy providers came to light this morning, with the announcement that Eon has been ordered to pay £12m to customers due to large scale mis-selling.

Ofgem’s investigation found that the energy supplier had been giving incorrect information to customers between June 2010 to December 2013. Although Ofgem didn’t find any evidence that Eon had set out to deliberately mis-sell to customers, it did find the company had failed to properly train and monitor staff.

I wish I could say I was surprised, but I can’t. Our 2011 investigation of energy supplier telesales found that incorrect advice was being handed out in almost a third of the phone calls we made. We also found that staff were giving out questionable advice about potential savings, cashback deals and fixed prices. It’s extraordinary that mis-selling has continued for so long.

Eon customers to get compensation

Eon will pay around £35 to 333,000 Warm Home Discount customers. Automatic payments will be paid to some vulnerable customers, and 465,000 will receive letters to see if they are entitled to compensation. Eon has also set up a dedicated hotline, 0800 0568 497, for customers to get in touch.

Eon’s chief executive Tony Cocker has apologised to customers, adding:

‘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.’

The damage has been done

This is the largest fine of its kind to be issued to an energy company, and while it sends a clear warning message that mis-selling won’t be tolerated, it’s too late for those customers who were mis-sold. Energy suppliers shouldn’t wait for the outcome of the proposed competition enquiry and must seize their last chance to sort out woeful service standards and start to put customers first.

We think you should be able to trust that the price you pay for your energy is fair. If you want to help us Fix the Big Six, sign our petition and get your friends and family to do the same.

Do you think you were affected by Eon’s mis-selling? Have you had a bad experience with another energy company? Reveal all here.

Comments
Profile photo of Beryl
Member

Another example of a foreign (German) based energy company taking us for a ride. Were they applying the same rip of tactics to the Germans I am wondering and if so why did it take an investigation by a UK regulator to expose them? Who will ultimately pay for this fine I am thinking. Will it be passed onto the consumer?

Profile photo of wavechange
Member

At least some of the fine will be paid from cuts to the bonuses for the CEO and directors: http://www.bbc.co.uk/news/business-27433428

Profile photo of Lee Beaumont
Member

I found out about this matter this morning thanks to Twitter & have already spoken to E.ON as i used to be with them (before starting my money saving stuff) and they are looking into it for me.

I have to come clean, E.On singed me up when they came to my home doing door to door. But I was very naive back then.

Profile photo of Lee Beaumont
Member

To update as it’s been 2 months since this post, E.ON turned down my claim so now it’s with the Energy Ombudsman waiting to be looked into.

Profile photo of malcolm r
Member

It seems Ofgem should be congratulated for bringing this to light after a thorough investigation. It is a pity, though, that it took 3 years to get a result when it should have been nipped in the bud sooner; to be fair, they did try but E-ON did not fully comply. I’m also pleased E-ON were not fined (well. they were fined £1) but that the penalty imposed was to give money to their vulnerable and warm-front customers (the £12 million).

For anyone interested, the full report can be found here https://www.ofgem.gov.uk/ofgem-publications/87785/noticeofintentiontoimposeafinancialpenaltyone.on16may2014.pdf
It does show the downside of paying your sales agents – including 3rd parties – by commission; that simple puts pressure on them to make a sale at any cost by misleading naive consumers.

It may be that all the directors should have had their bonuses cancelled, not just restricted to 75% or 50%. Perhaps in future they would then be vigilant in seeing to it that the company was run in a more honest way.

Profile photo of wavechange
Member

I agree that the company should be run in a more honest way, but paying bonuses to senior staff may not promote appropriate behaviour, any more than having doorstep salespeople on commission does.

Profile photo of ChrisGloucester
Member

Quite right the company should be penalized for it’s wrong doing but who will actually get that £12m and where will that £12m actually have come from in the first place?
Penalties should either take the form of forced compensation payments to those wronged and/or penalties should be paid personally by those individuals responsible.
All that’s happening here is the creation of a £12m hole that will eventually have to be filled by the customers of Eon.
Where else do you think Eon get their money from?
Doesn’t seem quite fair or right to me.

Profile photo of malcolm r
Member

Chris, always difficult to fund fines fairly. NHS hospitals fined – money from the taxpayer. E-ON fined or penalised – money eventually from its customers and shareholders (reduced profits and reduced dividend). Those involved directly seem to escape – if you can track them down. The salespeople and agents who persuaded naive customers? Remove their commission – but who trained them? Penalise their managers and trainers? But who set the context in which they work? It comes down to those who run the company – the directors. They should be held responsible, as in all organisations; they control the operation of the company (or public organisation) and need to understand their responsibility. Only when the suffer personally might they look more honestly at how their organisation operates. But they cannot of course fund large penalties, as they don’t have the resources; the shareholders would, and should, fund these through loss of dividend.

Profile photo of Beryl
Member

Some E.ON info gleaned from Wikipedia which you may find interesting:

They are one of the largest investor owned companies with HQ based in Dusseldorf, operating in 30 countries serving Europe and the US and looking into entering the Brazilian market, with 26 million customers. Subsidiaries include E.ON Ruhrgas E.ON UK. E.ON Sveridge. OGK-4. E.ON Russia.

Revenue [based on 2011] €112.954 billion
Operating Income €5.438 billion
Profit €1.861 billion
Total Assets €152.872 billion
Total Equity €39.613 billion
Employees 78,889 [end 2011]
CEO. Johannes Teyssen

These stats illustrate the sheer scale of these large conglomerates and the difficult and lengthy task regulators such as Ofgem must encounter during their investigations. [Their report forwarded by Malcolm also shows this.] My guess would be the company directors would own the lions slice of the shares – but that is pure speculation on my part.

Member
Sophie Gilbert says:
17 May 2014

I wasn’t affected, but the news warms the heart. Do we think they were fined enough?

Profile photo of wavechange
Member

I suspect that the bad press will have more effect than the fine, which is not large compared with the turnover of the company. I’m pleased that e.on has a press release on their website and I assume that Ofgem insisted on this.

I would like to see a public record maintained for all major failings by organisations, and not just by companies.

Profile photo of Beryl
Member

Just a drop in the ocean I would say Wavechange. The other Big 5 should now take heed and introduce a more honest approach. Maybe the result of the bad press will kick start a little competition back into the market if consumers are willing to take action now and switch. As I am not with E.on I am unable to contribute. In the meantime I await with bated breath the results of further investigation by Ofgem and the CMA.

Profile photo of wavechange
Member

The energy companies have got to learn from their mistakes and those of their competitors. Last year, SSE was fined for something to do with doorstep sales. Their website has plenty of self-promotion but I cannot find any information there about how much they were fined and why.

I wonder how long e.on will keep the news about their fine on their website.

Profile photo of malcolm r
Member

E.ON’s annual report gives full information.
https://www.eon.com/content/dam/eon-com/ueber-uns/publications/GB_2013_US_eon.pdf
Shares are owned 28% by retail investors and 72% by institutional (p.12)
The Board of Management (9) have average total incomes of €2.05M inc. bonus €680k.
Supervisory Board – average incomes €139k.
They rank 16th in the world’s largest companies (according to Wiki), just above Apple (18), behind VW (11) with Wal-Mart 1st.
You need to be a big company to raise the capital needed for large projects.

Member
Mark Seddon says:
26 May 2014

I found this out on BBC News the other day. I contacted EON, they looked into it straight away but I ain’t happy with the compensation they have offered me. They say when I changed over in 2012, I was signing for a dearer tariff than my Npower Tariff. I also seen Npower mis-sold people from 2010-2012 and I haven-t heard anything from them if I was mis-sold from them when I changed from EDF. Does anyone know what I should do?.

The Compensation they offered me was little to what I should get because during this tariff they put me on a payment plan and expected me paying £15 a fortnight out of my benefits. They offered me £73 compensation, do you think this is good enough I don’t because of what stress I was in throughout these years.

Some of the things I was struggling with was paying my rent this was because I was in private housing and the rent was high and I had a top up on my rent. During this time I had too make numerous applications for Discreationary Housing Benefit Payments on which I have evdience for this.

Member
Tom Warrington says:
10 July 2014

i was mis-sold electricity and gas by Eon .. I complained to Ombudsman they took Eon side
Eon told them a load of lies .. what can i do now ? i have asked Eon for a copy of the phone call but they wont send it to me

Member
Katherine says:
22 July 2014

I was also misold electricity and gas, i was told that i was being oput on a fixed price plan and i would only have to pay 70 pounds a month and no more, i asked several times if there were any other hidden charges or would i recieve any other sort of bill and each time the answer was no. Almost a year after being with them and not receiving 1 bill, but oaying the £70 a month direct debit, i was hit with a £1500.00 bill which was estimated. I fought this, i was due to have my 2nd child in that month and was an extremely stressful situation. I went to the ombusdman and they were on eon’s side. I am so pleased they have been caught out, I was made to pay £750.00 in the end and they gave me a good will gesture off of 75.00 for poor customer services……They are more than poor they are ridiculous!!!!!