SSE's Managing Director, who is due to face MPs later today, explains why customers are experiencing a 8.3 percent increase in their bills.
After SSE announces gas and electricity tariffs will prices will rise next month, other big energy firms refuse to rule out own price hikes.
Some tips on how to save money on your energy bills.
Chancellor George Osborne has said that it is "quite right" that energy firm SSE has received a big fine after treating their customers badly.
Ofgem is also conducting mis-selling investigations into Scottish Power, Npower and E.ON.
In April 2012, EDF Energy agreed to pay a £4.5m fine to help vulnerable customers for breaching marketing licence conditions.
A spokesman for M&S Energy has admitted that some of its customers were affected by SSE mis-selling, but insists the number accounts for less than one percent of the total:
– M&S Energy spokesman
We are aware that today’s announcement by Ofgem regarding SSE may have unfortunately affected less than 1 per cent of M&S Energy customers.
SSE has apologised unreservedly to those affected and has taken significant action to remedy the situation and ensure this will not happen again.
Anyone who believes they may have been affected should contact SSE directly as soon as possible.
The company refused to reveal exactly how many customers were affected, but said it was a "very small number".
The biggest fine for an energy company goes beyond the company itself.
According to Ofgem, SSE was not just misleading customers under its own brand, but also under one of the biggest and most respected in the country: Marks and Spencer.
SSE salespeople were mis-selling energy deals on Marks and Spencer shop floors under the brand name M&S Energy. They still, as things stand, operate this contract for one of our biggest high street names.
It is not unusual for energy companies to run deals under other brands - Tesco and Sainsbury's both offer deals on gas and electricity tariffs, for example.
But being dragged into a mis-selling row is hardly helpful for companies who are trying to offer their existing customers extra services.
– Energy Minister Michael Fallon
I have rarely seen a worse case of consumers being misled so badly.
With rising energy prices, and multiple tariffs to contend with, consumers deserve the clearest, fairest and best possible deal.
The Government is already acting through the Energy Bill to give Ofgem the teeth it needs in future to get compensation to those directly affected.
And we’re using new legislation to require suppliers to simplify their tariffs and get rid of historic poor deals.”
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.