Customers of SSE have been urged to seek compensation after the energy supplier was fined £10.5 million by Ofgem. The energy regulator imposed the penalty after uncovering evidence of ‘widespread’ mis-selling.
The fine was the largest of its kind in the UK, where the energy market is dominated by the so-called Big Six suppliers. Although Ofgem is powerless to control the pricing models set by the leading energy suppliers, it is able to impose penalties if evidence of financial wrongdoing or anticompetitive behaviour is discovered.
SSE received the £10.5 million fine on Wednesday after Ofgem exposed a culture of mis-selling among the firm’s sales staff. Ofgem claimed that SSE had made “misleading and unsubstantiated statements” to prospective customers about tariffs. The energy regulator suggested that the aim of sales staff was to attract new business at virtually any cost.
Ofgem’s Ian Marlee said: “People were expecting savings and were not getting the [anticipated] levels of savings. People were being told direct debit levels that made it sound like they were going to be better off when in fact they were worse off”.
Although the mis-selling only affected SSE customers, the 10.5 million fine will be paid to the Treasury. Ofgem has therefore urged customers to seek compensation from SSE if they feel that they were affected by the mis-selling. Customers of M&S Energy, which is supplied by SSE, could also be eligible for compensation.
SSE already faces a sizeable compensation bill after a previous instance of mis-selling. The supplier has already set aside 5 million for customers who were affected by doorstep mis-selling last year. Ofgem estimates that over 20,000 SSE customers have been mis-sold tariffs since 2009.
The mis-selling of energy tariffs is a boot in the face for households who are already struggling to afford the cost of electricity and gas central heating. The average dual-fuel energy bill in England and Wales has more than doubled since 2004 and experts predict that tariffs will double again over the next few years. SSE customers are likely to be pleased that they may be able to claw back a little money from their supplier, but by fining the supplier Ofgem is merely treating one symptom of a far more extensive problem.