E.ON brand at risk as it vows to put mis-selling past behind it

E.ON’s brand reputation is at risk after admitting its efforts to reset customer relations have been hampered having received a record £12m fine from Ofgem for mis-selling its energy tariffs.

The energy company has been slapped with a record £12m fine by Ofgem.

The energy provider will split the fee between thousands of customers nationwide in compensation after an investigation found it flouted energy sales rules between 2010 and 2013. The three-year period covered the launch of the supplier’s 28,000 strong customer panel in 2011 to assess its tariffs, bills, customer payment methods and sales methods, as part of the company’s strategy to “reset” its relationship with customers.

It failed to uncover and address what Ofgem branded “extensive poor sales practices” in the period, resulting in a “large number” of billpayers being mis-sold to by the supplier. E.ON had failed to properly train staff, leading to incorrect information being provided to customers over the phone and on their doorstep, the regulator added.

The utilities firm will pay around £35 to 333,000 of its “Warm Home Discount” customers “within a matter of weeks” and will also make payments to those vulnerable billpayers who may have been affected by the issue. It is also ending cold-calling as part of a complete overhaul of its sales operations.

The company vowed to put the issues “right” and has embarked on a social media push to offer concerned customers additional information. Details will also be put online, while 465,000 customers will receive letters highlighting that they may have been mis-sold their energy tariff.

Tony Cocker, chief executive of E.ON UK, says: “We are really sorry and want to make it absolutely clear that we’re putting this right.

“It is completely unacceptable that we may have been unclear with customers about their tariff choices and as a result those customers may not have made the best choices for them. There was no organised attempt to mislead, and Ofgem has acknowledged this, but that does not excuse the fact we did not have in place enough rules, checks and oversight.”

The announcement calls into question the company’s efforts to address customer mistrust around the brand. Since 2012, elements of the company’ marketing and sales activity has been pulled from its ongoing “Reset Review” to evaluate its relationship with customers.

E.ON’s rebuke comes just almost a year after rivals SSE and Scottish Power were handed £10.5m and £8,5m fines respectively and is the latest Ofgem attempt to rectify the transparency issues that have blighted the energy sector in recent years.

Sarah Harrison, senior partner in charge of enforcement at Ofgem, says: “The time is right to draw a line under past supplier bad behaviour and truly rebuild trust so consumers are put at the heart of the energy market. E.ON has today taken a good step by accepting responsibility for its actions and putting proper redress in place.”