EDF Energy agrees to pay a £4.5m 'fine'
- 9 March 2012
- From the section Business
Energy supplier EDF has agreed to pay a package worth £4.5m - including £3.5m to customers - after an Ofgem investigation into how it tried to make sales to customers.
The payment, imposed by the regulator Ofgem, is the biggest of its kind.
It will see £50 paid into 70,000 accounts of what EDF describes as its "most vulnerable customers".
EDF denied that the amount was a fine or penalty - although the total of £4.5m includes a £1 penalty.
Ofgem found that EDF had breached some aspects of the licences governing the information it gives when selling to customers.
Customers were not always given complete information on matters including contract terms and the way their direct debits or annual consumption was calculated.
It also said that telesales agents sometimes made opening statements in their calls to customers that claimed it could offer savings before they knew the actual circumstances of the customer they were calling.
The package agreed following of the investigation includes:
- Some 70,000 households that received the Warm Homes Discount will automatically be refunded £50 each. These customers generally include those on some level of Pension Credit
- A payment of £1m will be paid to the Citizens Advice Energy Best Deal campaign, which raises awareness among customers on how to get the best energy tariff
Ofgem said it had accepted EDF's offer of a package for vulnerable customers in place of a penalty, which would have have gone to the Treasury.
'The right thing'
Martin Lawrence, of EDF Energy, said "We are obviously disappointed that we failed to live up to the high standards that we expect of ourselves. As soon as the issue was identified we immediately took action to satisfy ourselves that we are fully compliant.
"We know that customers need to be able to trust the energy industry."
Sarah Harrison, Ofgem's senior partner in charge of enforcement, said: "EDF Energy has done the right thing by stepping forward and recognising there were weaknesses in its sales processes.
"The firm also took the initiative to correct these problems during Ofgem's investigation."
Ofgem also said it was continuing its investigations into EDF's rivals Scottish Power, SSE, and Npower, but these ongoing inquiries did not mean that they had made similar breaches.
"For the avoidance of doubt, the fact that Ofgem continues these investigations should not be taken as implying that any supplier has breached its obligations."
Audrey Gallacher, of watchdog Consumer Focus, said: "It is a positive step forward that an energy company has worked with the regulator to tackle this issue.
"We have called for Ofgem to have the power to make sure energy customers benefit from any fines - so it is good news that this voluntary approach has led to customers being compensated rather than money returned to the Treasury."