Simon Read: Energy firms must be controlled
This week's £10.5m fine of Scottish and Southern Energy (SSE) for mis-selling tells us two important things.
First is the fact that the energy watchdog, Ofgem, is getting tough. Second, and related of course, is the fact there will be more massive fines to come. SSE was slapped with a record fine after it was caught lying to customers about prices and the supposed savings that could be made by switching.
The news prompted calls for a criminal investigation, with several MPs suggesting the mis-selling was "fraud". One thing's for sure, if you or I tried to flog stuff for more than it was worth while lying about its features, we wouldn't be surprised to have our collars felt by the rozzers.
But it's not just SSE that's in the frame for mis-selling. The rival "big six" firms Scottish Power, nPower and E.on remain under investigation for dodgy sales, and EDF was fined £4.5m last year for mis-selling.
SSE's £10.5m fine will be paid to the Treasury. But I'd like to see further penalties made on energy companies caught lying. Ofgem can fine firms, but can't force them to award compensation to customers. That should change in the upcoming energy Bill, but the change can't come soon enough. The regulator is ready to bare its teeth at rogue firms, but needs stronger powers to do so.
Simplify investment fees
I've been calling for a simple way to compare the cost on investment funds for years, so it is pleasing to report that an industry grandee is finally taking up the challenge.
Daniel Godfrey, right, chief executive of the Investment Management Association, has called on fund managers to explain charges in a way that actually helps consumers, rather than "leaving them scratching their heads".
He has proposed that managers publish charges as pounds and pence per unit. By doing so, investors would be able to see at a glance how much their fund units cost and impact on performance in relation to others.
Sounds simple? The cost needs to take account of such things as annual management charges, administration expenses, performance fees and stamp duty. But Mr Godfrey says it can be achieved using accounting that already exists.
He's put the idea out for discussion and it should get some serious responses. The fund industry is failing us on charges but now has a chance to put that right. I hope it does so.
Local battles spread
News reaches me from Cambridge where the local community is standing together to help payday loan victims. A new campaign to promote credit unions as an alternative has been launched involving people from the local Citizens Advice Bureau, the council and Cambridge and District Volunteer Centre as well as from the city's two credit unions.
It's these kind of local partnerships that can help make a difference across the country. I've previously reported on similar activities in Wigan, Newcastle and across London, and am keen to hear about more initiatives, especially those which harness the power of local communities to help vulnerable community members.
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