Gas hard sell attacked
Children recruited to pressurise parents into signing contracts in cut-throat battle for customers
Sunday 15 December 1996
The rebuke follows complaints about aggressive selling techniques used by Eastern's commission-based doorstep salesmen in Kent, Sussex and Dorset, areas that represent the next stage of the Government's plans to liberalise the gas market by 1998 and increase consumer choice.
Service is not scheduled to begin in these counties until next spring, but the estimated 1.5 million householders are already receiving promotional material and sales calls from a number of competing gas companies.
Clare Spottiswoode, director-general of Ofgas, is expected to take Eastern to task for not living up to the voluntary code of conduct drawn up last month by the Gas Forum, a trade association of gas suppliers, in an effort to clamp down on abuses.
Ofgas is not empowered to fine any company involved in gas supply, nor is it allowed to take away a company's licence.
In the South-west of England, the first part of the country to have an open market for domestic gas, a number of entrants have been embarrassed by the exposure of pressure selling tactics by their salesmen.
Tactics used by gas companies have included using schoolchildren to sell the gas contracts to their parents in return for a cash payment to the school for every successful sale. Other tactics have included encouraging consumers to sign "letters of interest", only for them to find out later that they had signed full contracts.
The new complaints are that Eastern's salesmen wrongly advised householders that British Gas was disbanding or withdrawing supplies from the area.
"We have been receiving about four complaints a week, which is obviously four too many," an Eastern spokesman said.
"To set that in context we are making 30,000 visits a week and signing up 3,000 customers a week."
The spokesman also confirmed that, following talks with Ofgas, it would be strengthening its customer code, checking all contracts signed so far and increasing its "cooling off" period from seven to 14 days to give customers a chance to rethink.
Sue Slipman, director-general of the Gas Consumers Council, said: "One can see parallels with the pensions misselling scandal emerging. We need regulation with teeth before the complaints become an epidemic."
She said gas companies were incapable of regulating themselves because they needed to gain market share very quickly.The call for more formal regulation is supported by some figures in the gas industry itself. Earl Parsons, managing director of Sweb Gas, which was the first company to be rebuked as a result of door-to-door misselling in Devon and Cornwall, said his company would support statutory controls. "We found big problems with doorstep selling. It was very hard to manage, so we got out pretty fast," he said.
The voluntary code drawn up by the Gas Forum had not been ratified, he said, because some of the members had considered its standards "too low". Other members, however, were refusing to raise the standards.
As a result of the controversy over gas selling techniques some companies with plans to enter the market are having second thoughts. BP, which was expected to launch its domestic gas service early next year, is now "considering its position".
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