Energy firms face inquiry over claims of mis-selling

TWO Scottish power companies are to be investigated by the energy watchdog amid concerns of mis-selling of contracts to consumers, it was announced yesterday.

Scottish Power and Scottish and Southern Energy were named by Ofgem along with npower and EDF Energy as companies who are suspected of failing to comply with new obligations to prevent mis-selling.

The energy regulator said it was prepared to take "strong action" if it found that they had breached new obligations to prevent customers being misled into signing contracts with suppliers.

It has also set up a hotline for consumers who are concerned about the sales approaches employed by suppliers to sell energy contracts, either face to face or by telephone.

The move follows tougher obligations imposed on suppliers in October as part of Ofgem's investigation into the energy retail market.

The body defines mis-selling as a customer being "misled, sold inappropriate products or subjected to a sales pitch which is not conducted in a fair, transparent, appropriate and professional manner".

Ofgem spokesman Andrew Wright said: "Suppliers have existing obligations to detect and prevent mis-selling, and new licence conditions were brought in following our probe to increase protection for customers.

"We expect all suppliers to comply with these tougher obligations but if our investigations find otherwise we will take strong action."

Under the new rules, suppliers must be "proactive" in preventing mis-selling to customers, both in person and over the phone, while suppliers selling contracts face-to-face must give customers an estimate before any sale is concluded. Customers should normally also receive a comparison of the supplier's offer with their current deal.

Consumer Focus head of energy Audrey Gallacher said: "This is a welcome step by Ofgem to address years of customers getting a bad deal on energy prices on their doorstep.

"Complaints have declined since new rules came into effect this year, but suppliers still seem to be flouting the rules."

Christine McGourty, director of Energy UK, which represents the leading gas and electricity companies, said: "The companies involved will collaborate fully with the Ofgem investigation and are awaiting further details from the regulator.

"Companies take their customers' concerns seriously and would urge customers to call them directly with any concerns they have."

A ScottishPower spokesman said it had been contacted by Ofgem over its concerns: "ScottishPower insists on the highest standards possible for all of our sales agents, and invests heavily in training and development to maintain these standards.

"We subscribe to the Energy-Sure Code of Practice and are committed to ensuring responsible practices across all of our sales channels."