Branson may pull plug on energy firm in a month

Sir Richard Branson has given Virgin Home Energy, the troubled domestic gas and electricity supplier, a month to clean up its act or lose the right to use the Virgin name.

The move follows a torrent of bad publicity about the antics of Virgin Home Energy sales agents and continuing concern over its customer service standards. Senior Virgin executives fear the move into the energy market is severely tarnishing the group's brand reputation.

In the latest calamity, 5,000 direct debit customers of Virgin Home Energy have inadvertently received letters threatening them with court action and a debt collection agency unless they settle their accounts even though the company has failed to send them final bills.

Virgin Home Energy is 75 per cent owned by London Electricity, which is itself a subsidiary of the state-owned French power company Electricité de France.

A Virgin spokesman said that it had invoked its brand rights under the agreement with London Electricity and would withdraw the use of the name by mid-September unless it was satisfied with Virgin Home Energy's progress in stamping out mis-selling and improving customer service standards.

EdF officials are fearful that if the Virgin name is removed, it will jeopardise the company's attempts to build a national brand to sell gas and electricity right across the country.

Last month Virgin Home Energy sacked 14 sales agents after they were discovered in a north London library with a copy of the electoral register, forging the signatures of dead constituents on to energy supply contracts. Other complaints logged by the consumer group EnergyWatch include sales agents pretending to offer discounts and vouchers for other Virgin products such as CDs and train tickets to customers who sign up for gas and electricity.

Virgin said it wanted assurances that sales agents found guilty of mis-selling would not be employed again. It also wants the creation of a sales force employed directly by Virgin Home Energy. A spokesman for London Electricity apologised for the latest error saying it had been "totally wrong" to send out the warning letters.