Npower fined £1.8m over mis-selling

Npower is to be fined £1.8m after it failed to take sufficient action to prevent mis-selling of contracts to customers, energy regulator Ofgem announced today.

Ofgem found that npower breached conditions of its supply licence by failing to take adequate steps following complaints from customers about visits by the company's doorstep salespeople.

Although npower had procedures in place to follow up complaints, company managers had not done enough to apply and improve them, allowing incidents of mis-selling to proceed unchecked, Ofgem ruled.

As a result, Ofgem concluded that Npower had failed in its duty to ensure that it had taken all reasonable steps to fix the matter.

Ofgem's managing director of corporate affairs, Sarah Harrison, said: "This decision sends a clear message to energy suppliers that failing customers and falling short of the licence standards will lead to Ofgem action, as well as associated reputational damage.

"Mis-selling undermines consumer confidence, but getting it right on the doorstep can help customers make effective choices in the energy market. This is why Ofgem's energy supply market probe committed to strengthening the doorstep selling rules."

The regulator said the penalty "could have been much higher", but reflected the nature of the licence breach and the prompt action taken by Npower.

Ofgem said it would put forward tougher rules next year to help tackle mis-selling.

Its recent probe into the energy supply market found that rules governing suppliers' sales and marketing activities needed to be strengthened to help customers make well-informed decisions in response to direct sales.

New measures could include an obligation for salespeople to give written quotations comparing their offer with a customer's current energy bills, Ofgem said.

Npower said in a statement: "We were very disappointed and concerned when we found out that back in April some sales staff were deliberately flouting our procedures. We set high standards and there is no place for this behaviour in our company so we immediately dismissed those who were acting fraudulently.

"We have improved our processes and introduced sales validation on the doorstep. The customer is put directly in touch with a dedicated call centre to make sure they are completely happy with all aspects of the sale. No commission is paid unless the sale is validated.

"We are pleased that Ofgem has recognised our improvements and has confirmed that this represents best practice.

"As a result of this and other measures, like mystery shopping, our sales complaints have declined to an all-time low and we will remain constantly vigilant to ensure that they remain so."

Earlier this year, an undercover reporter for The Sunday Times claimed to have found npower salesmen making customers sign forms without telling them they were contracts, lying about standing charges and taking advantage of people who spoke little English.

Several potential customers were falsely told they would save money by switching to the firm, the newspaper said.

Industry regulator Ofgem launched an investigation into the firm on 22 April.