Energy panel to stamp on dubious sales methods

Click to follow
The Independent Online
Energy companies and consumer groups yesterday put their faith in self-regulation in an attempt to head off further damaging publicity about dubious sales practices in the emerging competitive domestic gas and electricity markets.

The Gas Consumers' Council (GCC) and Electricity Consumers' Committees supported a new code of marketing practice, backed by an industry panel with the power to "name and shame" persistent offenders. But both groups admitted the new code was a compromise and warned they would press for legally enforceable sanctions if marketing "scandals" continued.

The Association of Energy Suppliers (AES), with a pounds 60,000 annual budget, will have a seven-member panel to review complaints. This will include Mike Alexander, managing director of British Gas Trading, Sue Slipman, GCC director, and Yvonne Constance, chairman of the electricity committees. Four members, including Mr Alexander, will represent gas and electricity suppliers, with another seat going to a public policy expert from lawyers Clifford Chance.

Philip Daubeney, chief executive of the Electricity Association and the new director of the AES, said the code worked on the "three strikes and you're out" principle. If member suppliers had three formal warnings they could be expelled. He said all 14 privatised electricity suppliers would join and he expected all gas companies to do the same.

Ms Slipman said the AES was a "fall-back position" after the GCC had failed to persuade Ofgas, the watchdog, to push for a compulsory scheme: "This is a major improvement which would stop the industry coming into disrepute. It may mean we don't need license conditions."

The AES code includes a seven-day minimum cooling-off period after customers sign contracts. It stipulates people should not be called early in the morning or late at night and says sales agreements should be followed by further checks.

Since domestic gas competition trials began in May 1996 there have been hundreds of complaints about dubious doorstep sales methods, many involving Eastern Natural Gas, part of the regional electricity group. In the most recent case, members of Eastern's sales force in Dundee and Edinburgh had allegedly told consumers that British Gas had "run out of gas". Consumer groups fear the same mistakes could be repeated when the domestic electricity market opens from next April.

Neil Lambert, joint general manager of Calortex, said his company would join the association. "The code does now appear to have teeth, though clearly if it fails there might have to be a mandatory licence obligation," he said.

Dubious gas market sales practices

March 1996 - Sweb temporarily withdrew its sales force in the first competition trial in South-west England, following complaints about high-pressure tactics

November 1996 - Eastern Natural Gas sacked one of its sales force after allegations of high-pressure methods in Kent and Sussex. The teams had allegedly told customers British Gas had "changed its name to Eastern''

16 June 1997 - Eastern called to Ofgas for another dressing down over complaints about sales tactics, this time in Scotland