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SSE fined £10.5m by Ofgem after misleading consumers about potential energy contract savings

Energy regulator Ofgem has issued its biggest ever fine to an energy supplier after determining that SSE had been guilty of mis-selling energy contracts to consumers.03 Apr 2013

Ofgem fined SSE £10.5 million after it found that failings in management within the company had allowed sales staff to make "misleading and unsubstantiated statements ... to potential customers about savings" they could make.

Scripts given to sales staff to encourage customers to sign up to deals with SSE were misleading, whilst management also failed to "monitor and audit" doorstep, in-store and telephone sales activities, Ofgem said. In addition consumers were given an accurate comparison of estimated SSE charges relative to rivals' and there was also a failure to consider "all relevant information" when the annual energy consumption of a customer was being projected, it said.

"Customers contacted by SSE were exposed to misleading statements, inaccurate and misleading information on SSE’s charges and misleading comparisons between SSE’s charges and the costs with other suppliers," Ofgem said in a statement. "These failures meant that many customers were unable to make well-informed decisions about whether to switch to SSE and about comparing products in a competitive market, and they were exposed to the risk of choosing a more expensive energy deal."

"Customers were also told that they could save more money on switching to SSE than was possible. In addition, insufficient checks were made after the contract was made," it added. "The level of fine reflects the seriousness and duration of breaches, the likely substantial harm that they have caused and the likely gain to SSE."

Ofgem said that although it had found that SSE's senior management had not "engaged in any willful or intentional non-compliance with the licence conditions", it said the board had not made compliance "a sufficiently high priority".

SSE has set aside £5m to compensate consumers that were mis-sold to by the company. Ofgem has not yet got the power to order companies to provide compensation to consumers, but the regulator is set to be handed such powers under reforms to the energy market set out in the draft Energy Bill.

"In order to restore trust in the energy market suppliers must comply with their obligations and play it straight with consumers," Sarah Harrison, Ofgem’s senior partner in charge of enforcement said. "Ofgem’s findings show SSE failed its customers, mis-sold to them and undermined trust in the energy supply industry."

"Today’s fine sends a clear message to suppliers that Ofgem will hold to account those companies which fail to treat consumers fairly. It is time for the energy industry to take note and get behind Ofgem’s reforms to rebuild trust and make the market simpler, clearer and fairer for consumers," she added.

SSE has said that it accepts the fine handed to it and that it is "deeply regretful that breaches occurred". It apologised to affected customers for sales activity that it said "ran counter to the values and culture of the company".

"Existing and potential customers can rest assured that we now have the systems, procedures, staff, training and auditing in place to ensure that they will not be let down again," William Morris, managing director of SSE's retail division, said in a statement.