Ofgem has revealed that E.on will have to stump up £12m in compensation for mass mis-selling of energy contracts to ordinary Britons.
A mis-selling investigation by the energy regulator revealed that E.on broke sales rules and caused harm by its extensive poor sales practices carried out between June 2010 and December 2013.
"Since 2010 Ofgem has imposed nearly £100m (€122m, $168m) 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," said Sarah Harrison, senior partner in charge of enforcement at Ofgem.
"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. E.on has today taken a good step by accepting responsibility for its actions and putting proper redress in place."
Ofgem said E.on's management arrangements were insufficient to protect against mis-selling and, as part of the compensation package, it will make automatic payments to some vulnerable customers.
E.on has already set up a sales compensation fund with a dedicated hotline and has showed a "willingness to make redress payments," confirmed Ofgem.
What Went Wrong?
Ofgem's investigation found no evidence that E.on's senior management set out to deliberately mis-sell to customers, but apparently the energy provider did not do enough to identify issues or act on problems when discovered.
In addition, E.on failed to properly train and monitor both its own staff and those it employed through third party telesales agencies, leading to incorrect or misleading information being provided to customers on the doorstep and over the phone.
"E.on has acknowledged these failings, made considerable changes and improvements to its processes, including ceasing to use the third party agencies involved, and shown good cooperation throughout the investigation. Had this not been the case the penalty would have been higher," said Ofgem.
E.on's Compensation Package
The £12m compensation package will pay for the following:
- Pay around £35 to 333,000 of their customers who are normally recipients of the Warm Home Discount. This redress package will benefit pensioners, disabled and low income families
- Additionally, make automatic payments to some vulnerable customers who may have been affected by E.ON's poor sales practices
- Set up a dedicated hotline 0800 0568 497 and compensate all consumers that it mis-sold to
- 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.