Consumer Focus has welcomed Ofgem's decision to fine SSE for the "systemic failure" in its direct selling operations.
– Adam Scorer, director of policy at Consumer Focus
This is not a case of one bad apple or one rogue sales team. The problems at SSE affected the whole direct selling operation and represent a fundamental failure at one of our biggest energy companies.
Other companies have also broken direct selling.
This has been a stain on the energy market since the introduction of competition. While the situation has got better and many companies have decided to end doorstep sales, the recent history casts a long shadow and Ofgem are right to take this scale if action.
In response to Ofgem's £10.5m fine for mis-selling, energy firm SSE's corporate affairs director Alan Young said the firm was "very sorry" about the breaches of the rules.
He told the BBC Radio 4 Today programme
What we were doing was not adequately telling people about the terms and conditions of their contract or adequately making sure they had the information they needed to switch.
We have set up an independent compliance unit to make sure, to monitor, to audit, to randomly check energy sales across all channels now so customers can have the assurance when they are dealing with us there are safeguards in place and proper structures.
We have totally reformed our business in this area, we have restructured it.
Mr Young also defended the management team still being in place, insisting SSE was one of the "best companies in Britain".
According to Ofgem, some of the misleading claims made on the doorstep, over the phone or in-store to customers by energy firm SSE were as follows:
- Telling some customers that they would save money when in fact they were switched on to a more expensive contract
- Saying that by switching to SSE they would be getting the full reductions they’re entitled to, “just like the government intended”.
- Saying that other suppliers were putting their prices or that price increases were higher than they actually were.
- Suggesting they could put them on a “preferred customer tariff… with no standing charge”, omitting that they would be charged higher first tier unit rates instead of a standing charge.
In February, SSE's incoming chief executive Alistair Phillips-Davies told ITV News' Business Editor Laura Kuenssberg that he wants to rebuild customers' trust in the energy company.
He pledged that if customer service at the company falls short, customers will receive £20 off their bills.
Last November, energy firm SSE revealed a 38% rise in profits in their half year results.
It came a month after customers were hit with a 9 percent hike in their energy bills.
However, the company's chairman said the energy supply business only accounted for 8% of the figure and its profit margin was 1.5%.
In order to restore trust in the energy market suppliers must comply with their obligations and play it straight with consumers.
Ofgem’s findings show SSE failed its customers, missold to them and undermined trust in the energy supply industry.
These failings did not just take place on the doorstep but also in the management of SSE. Ofgem’s fine reflects an absence of effective management control over energy selling.
– Sarah Harrison, Ofgem enforcement
Today’s fine sends a clear message to suppliers that Ofgem will hold to account those companies which fail to treat consumers fairly.
The proposed fine of £10.5m to be imposed on Scottish and Southern Energy for mis-selling is the largest-ever on an energy supplier.
The regulator said "misleading and unsubstantiated statements" were made to potential customers about prices and savings that could be made by switching to the energy provider.
Failures were found at every stage of the sales process from the opening lines on the doorstep, over the phone, to the confirmation process which follows a sale.
Ofgem also found that SSE management failures led to prolonged and extensive misselling.