Five questions on: E.on's £7.5m penalty charge

 

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The Independent Online

Is that how much the energy giant has been overcharging customers?

You're almost right. It's the penalty it was forced to pay this week by the regulator, Ofgem, after it was caught overcharging some customers and wrongly charging others an exit fee when they switched.

Is this the first time it's been caught treating customers unfairly?

No. In November 2012 the company was forced to pay a £1.7m penalty for the same thing, although the company said this time the underlying reason was different. "It's absolutely unacceptable that E.on failed to provide these vital customer protections yet again, and this persistent failure is the reason for the high penalty," said Sarah Harrison, Ofgem's senior partner in charge of enforcement.

So what went wrong this time?

Around 48,000 customers were potentially affected this time, many of whom were in the process of switching to another supplier, after E.on announced price rises in January 2013 and January 2014. But their bills were increased anyway – which is against the rules. Others were charged exit fees, even though customers are allowed to move without penalty when tariffs go up.

So if I was one of those affected, should I expect a cheque from E.on?

E.on said that in most cases customers were overcharged less than £10, and that it was continuing to provide refunds automatically. In other words, there's no windfall coming your way.

So what will happen to the penalty charge?

The £7.75m will be paid to Citizens Advice. The payment will go towards the charity's Energy Best Deal Extra project. Gillian Guy, chief executive of Citizens Advice, said: "Ofgem is right to clamp down on this kind of failure. This ruling will send a strong message to the whole industry that consumer rights cannot be ignored."

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