Guilty of misleading customers: SSE fined record £10.5m by Ofgem

Utility giant SSE is to be fined £10.5 million for 'prolonged and extensive' mis-selling (PA)

Energy giant SSE has been fined £10.5m by Ofgem for lying to customers about prices and the savings that could be made by switching provider.

The fine is the largest imposed on an energy supplier by the watchdog.

It reflects the seriousness and the duration of the mis-selling, Ofgem said, as well as the harm caused to customers and the likely gain to SSE, formerly known as Scottish & Southern Energy.

Today, the watchdog said its investigation of SSE, which has about 10 million domestic customers in the UK, uncovered “failures at every stage of the sales process”. The regulator said SSE mis-sold gas and electricity to customers on the telephone, in-store and at people’s homes, through the much-criticised doorstep selling.

In a damning statement, Ofgem’s enforcement chief, Sarah Harrison, said: “SSE failed its customers, missold to them and undermined trust in the energy supply industry.”

The criticism led to SSE chief executive, Ian Marchant, apologising. He said: “The breaches should never have happened and it is simply not acceptable that they did. There is no excuse; we should have done better.”

But the watchdog made clear that management at the firm was as much to blame. Ms Harrison said: “The failings did not just take place on the doorstep but also in the management of SSE.”

Mr Marchant, who is due to step down this summer, has been chief executive of the company since 2002 and, crucially, was in charge during the three-year period – 2009 to 2011– that the mis-selling breaches occurred.

Former minister Peter Lilley said shareholders would be “surprised” that senior bosses at SSE have not taken responsibility for the scandal by stepping down.

Meanwhile, Glasgow MP John Robertson, who sits on the energy committee, said: “If it’s proven they’ve broken the law, the police should get involved.”

Brent MP Barry Gardiner, who is Ed Miliband’s special envoy for climate change and the environment, said: “The activities that SSE have engaged in appear to be nothing short of fraud.”

The £10.9m fine will be paid to the Treasury. SSE, which made profits of £1.3bn last year, has in place a £5m mis-selling fund, where customers can receive compensation.

There are an estimated 20,000 victims of mis-selling by SSE.

The fine sends out a warning to rival “big six” firms Scottish Power, nPower and E.on which remain under investigation over allegations of mis-selling.

The previous record fine for an energy supplier was £4.5m, handed to EDF last year after it failed to meet various obligations as part of its licence.

In 2011, E.on was forced to pay back around £1.4m to 94,000 consumers who were incorrectly charged exit fees or overcharged following price rises.

Power points: What it promised

The dodgy tricks SSE used:

* Told customers they would save money but switched them to a more expensive contract.

* Said customers could make larger savings than were possible.

* Told customers that by switching to SSE they would get reductions they’re entitled to “just like the Government intended”.

* Said that other suppliers were making “all sorts of false promises”.

* Said rival suppliers were putting prices up and that other suppliers’ price increases were higher than they actually were.

* Claimed that it offered a “preferred customer tariff”.

If you think you might have been a victim of misselling by SSE, you can make a claim on a dedicated phoneline 0845 0707 388.