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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
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?

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

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.

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.

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.

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.

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.

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.

Member