'Misleading claims' cost EDF a £4.5m payout from watchdog

Tom Bawden
Saturday 10 March 2012 01:00 GMT

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Britain's energy regulator has effectively slapped a £4.5m fine on EDF Energy after finding sales staff at the "big six" utilities group guilty of making misleading claims.

Ofgem is forcing EDF to pay £3.5m in customer rebates and a £1m payment to a Citizens Advice Bureau fund as part of a settlement after finding that its sales staff had breached some rules on the marketing of its products.

The regulator found some doorstep sales staff failed to provide potential customers with complete information on tariff contract terms and how bills would be calculated.

Meanwhile, telesales staff made opening statements in calls to potential customers claiming to be able to save them money before knowing their circumstances and whether they were eligible for that tariff.

EDF will give about £50 each to 70,000 of its poorest and most vulnerable customers – at a cost of £3.5m – and pay £1m to a fund run by the Citizens Advice bureau to raise awareness among customers on how to get the best tariff.

The £3.5m customer payout is the first agreement between an energy firm and Ofgem to rebate customers who were not necessarily affected by the misleading sales techniques – in contrast to the usual practice of redressing victims of wrongdoing.

Ofgem and EDF insisted the payments were not a fine and said they served its customers better than a penalty – although, either way, they were a punishment for wrongdoing.

EDF and Ofgem said the energy group had not been found guilty of mis-selling. However, EDF did acknowledge "limited shortcomings".

EDF managing director Martin Lawrence said: "We're obviously disappointed that we failed to live up to the high standards that we expect of ourselves."

The agreement between Ofgem and EDF is part of an ongoing investigation into the energy companies' marketing practices. The regulator is continuing to monitor Scottish Power, SSE and npower.

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