Small and medium-sized business owners should be aware that four major energy companies are being investigated by Ofgem amid concerns that they have mis-sold to customers.
Npower, Scottish Power, Scottish and Southern Energy and EDF Energy all face questions from the regulator over face-to-face and telephone sales of energy contracts.
The companies face an investigation as to whether they breached new Ofgem rules that were implemented in 2008 that aimed to tighten up the sales process after receiving a number of complaints.
The regulator has the power to fine a company up to 10% of its turnover if a breach is discovered. All four companies have stated that they will co-operate fully with the investigation.
Previously, under the preceding mis-selling rules, Ofgem fined Npower £1.8m in 2008. London Electricity - now part of EDF Energy - was fined £2m in 2002.
"We expect all suppliers to comply with these tougher obligations, but if our investigations find otherwise, we will take strong action," said Andrew Wright of Ofgem.
M&C Energy Group, which represents some of the UK’s largest users of energy, has highlighted what it calls ‘sharp trading practices’ by energy providers when supplying business users.
The issues of debt blocking, automatic rolling contracts and stifling contract terms coincide with today’s announcement that four of the ’big six’ energy providers face investigations. M&C Energy Group believe thousands of businesses are paying well over the odds for their energy simply because their current energy provider is making it difficult for them to switch.
“Without doubt almost all of the 'big six' are involved in questionable practices with regard to business users. While steps have been made to simplify switching consumer contracts, little has been achieved to offer the same benefits to businesses - other than the very smallest users. The hoops organisations have to jump through to change suppliers are a huge disincentive even with the promise of big savings," said Mr Hunter of M&C Energy Group.
Ofgem is urging any householders who believe they have been mis-sold energy on the doorstep or on the telephone to report the case to the Consumer Direct hotline by calling 08454 040506.
