E.ON's chief executive has admitted the energy supplier did not have "enough rules, checks and oversight" in place, after Ofgem ordered the firm to pay £12 million to customers over mis-selling.
Tony Cocker said as part of overhauling its sales operations the company has ended face-to-face sales and outbound residential cold calling.
He added: "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 [...] There was no organised attempt to mislead, and Ofgem has acknowledged this".
E.ON has agreed to pay £12 million to vulnerable customers after an Ofgem investigation found that the energy supplier had failed to properly train its staff in providing correct information to customers, which could have misled customers. As part of this package E.ON said they will:
- Pay around £35 to 333,000 of their customers who are normally recipients of the Warm Home Discount. This redress package is thought to benefit pensioners, disabled and low income families.
- Additionally, E.ON has agreed to make automatic payments to some vulnerable customers who may have been affected by E.ON’s poor sales practices.
- The supplier will write to around 465,000 customers it has identified through its redress work, informing them of how to get in touch to find out whether they were mis-sold to.
Ofgem has praised E.ON for "accepting responsibility for its actions" after the energy watchdog found the supplier had mis-sold to customers. Ofgem's senior partner in charge of enforcement said:
Since 2010 Ofgem has imposed nearly £100m in fines and redress on energy companies for various rule breaches, including £39m for misselling, and introduced radical new reforms to make the market simpler, clearer and fairer for consumers.
The time is right to draw a line under past supplier bad behaviour and truly rebuild trust so consumers are put at the heart of the energy market.
ITV News Economic Editor Richard Edgar has tweeted:
Eon feels the heat as it's fined £12 million by the regulator for misselling contracts as recently as December last year.
Eon will pay its vulnerable customers (who get Warm Home Discount) about £35 each - there are about 1/3 of a million of them
Eon misled customers and its management failed to put checks in place to stop this.
Energy supplier E.ON is to pay £12 million to vulnerable customers as part of a redress package after an Ofgem investigation found the company broke energy sales rules between June 2010 and December 2013
The Co-operative Energy firm has announced a price rise of 2.5% on average.
In an email to customers, the company said: "As winter sets in and some energy companies raise their prices by as much as 10%, we’ve got some good news for you to warm to.
"Co-operative Energy is raising its prices on 8 January…but only by 2.5% on average across all our customers."
Energy Secretary Edward Davey called E.ON's price rises announcement "disappointing news".
Bur Mr Davey stressed:
This rise is ... lower than it would have been as a result of Government action to reduce the impact of price rises on consumers.
As part of their announcement today, E.ON have confirmed they will pass on these savings to their customers.
This does not let energy companies off the hook.
Asked about the timing of E.ON's price rises announcement, which came amid media focus on the death of Nelson Mandela and the devastating storms across the UK, Downing Street said, "It is for them to explain their decisions."
E.ON has announced its customers' dual fuel energy bills will increase by an average of 3.7% from January 18.
The company said that means the average variable dual fuel bill will go up by £48, electricity only prices will increase by 3.7% or £20, and gas only bills will climb by 4.6% or £37.
Chief executive Tony Cocker said changes announced by the Government earlier this week reduced the overall level of the rise that was necessary to cover extra costs.
The energy firm said it was "working hard to limit the impact on its customers" by announcing a lower average percentage rise than any other major supplier.
Earlier this week, E.ON said it did not expect to have to raise prices in the next 18 months "as a result of social or environment obligations".
But E.ON also warned, "There remains a risk, however, that increases in network charges or wholesale energy costs for example could force a price increase".
The announcement followed the Government's shake-up of green levies on Monday.