MPs call for energy doorstep mis-selling compensation
- 25 July 2011
- From the section Business
Energy companies should compensate customers who have been mis-sold gas and electricity deals on the doorstep, an influential group of MPs has said.
The Energy and Climate Change Committee said the problem of such mis-selling should have been dealt with years ago.
And combined with rising prices, the committee said the industry should examine whether many consumers may have paid too much for their energy.
Industry body Energy UK said the rules regarding sales had been toughened.
The MPs were told that up to 40% of those who switched suppliers on the doorstep did not end up with a better deal.
They also heard evidence that vulnerable customers were particularly targeted in this way.
One firm stated that more than 70% of pre-payment customers who had recently switched to it had been won on the doorstep.
The regulator is currently investigating four of the main energy firms over the issue.
Committee chairman Tim Yeo said energy firms should stop their "Del Boy" sales tricks.
"There is mounting concern in Parliament about the doorstep-selling techniques of large energy companies," he said.
"If it turns out that consumers are being persuaded to switch contracts when it's not in their best interests, by salespeople keen to earn commission, then it would only be right for the energy companies to cough up compensation."
Government watchdog Consumer Focus, which has been campaigning for a ban on cold-calling by energy salesmen, said the regulator Ofgem should take a "firm grip" on the market.
"Organised confusion, pressured selling, misleading information - no market should be able to operate like that, and especially not one that provides an essential product that is getting more and more expensive," said chief executive Mike O'Connor.
"Energy firms have had over a decade to get it right, but have failed miserably."
Since electricity supply was privatised in the 1990s, there have been persistent complaints that suppliers have employed salesmen who set out to trick customers on their doorsteps into switching from their existing gas or electricity firm.
The issue was highlighted in May when Surrey Trading Standards obtained the first successful prosecution of a supplier, in this case Scottish & Southern Energy (SSE).
Guildford Crown Court found the firm's salesmen guilty of using deliberately misleading sales material, in breach of the regulations that protect consumers against unfair trading practices.
Despite appealing against the conviction, SSE agreed earlier this month to close down its doorstep sales force.
If the original verdict is upheld, the company faces having money confiscated under the Proceeds of Crime Act.
The comments of the committee came as it published its response to Ofgem's review of the retail energy market, which was published in March.
The regulator said at the time it wanted to "break the grip" of the big six energy firms.
Three of them - British Gas, SSE and Scottish Power - have recently announced increases in their domestic tariffs for both gas and electricity customers.
The committee said it was worried about the apparent tendency of charges to "rise like a rocket and fall like a feather".
The committee also said the huge number of tariffs on offer to customers were designed to bamboozle people.
And it said it too was worried that the big six firms were dominating the market.
Energy UK director Christine McGourty said: "The rules around doorstep selling are tighter than ever, with sales people now required by the energy regulator to leave the customer with a written quote that sets out any likely saving.
"And sales people are also under instructions not to knock on doors that clearly display no cold-calling stickers."