‘Energy suppliers should be forced to compensate consumers’

The government has outlined plans to give regulator Ofgem beefed-up powers to force energy companies to compensate customers and businesses directly if they are found guilty of using improper marketing practices.

ofgem

Energy companies guilty of overcharging households or miss-selling contracts will be forced by Ofgem to compensate consumers on a “pound for pound” basis, through good will payments as well as public apologies, under the government’s proposals.

Currently, energy suppliers voluntarily give cash to consumers when they are in breach of trading practices, and while Ofgem can fine companies, any money goes directly back to the Treasury.

It is hoped that the changes, unveiled by the Department of Energy and Climate Change today (10 April), will bring the watchdog more in line with the powers held by other regulators such as Ofcom and the Financial Services Authority.

The consultation process will run until the summer (2 July) and if approved could be included in the energy bill, to be is published later this year.

The announcement comes at a time when all the major suppliers – British Gas, E.on, EDF Energy, Npower, Scottish Power and Scottish & Southern – have come under fire from Ofgem and consumers for increasing prices above the rate of inflation amid a difficult economic times.

Since 2007 the regulator has negotiated £6m worth of compensation for consumers, and imposed fines totaling over £18 million.

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