Energy giants face mis-selling investigation

Industry regulator Ofgem will probe the activities of EDF Energy, Npower, Scottish and Southern Energy and Scottish Power (see the Cheap Gas & Electricity guide).

Ofgem has received numerous tip-offs the quartet have breached codes designed to prevent mis-selling during door-to-door or telephone sales. Alleged violations include failing to issue estimates of how much a tariff costs or selling inappropriate deals.

The regulator stresses its investigation does not mean firms have broken any rules. It has set up a hotline for consumers to report any evidence of mis-selling.

Any firm found guilty faces a huge fine. In 2008, Npower was slapped with a £1.8 million penalty for mis-selling.

Action promised

Andrew Wright, from Ofgem, says: "We expect all suppliers to comply with these tougher obligations but if our investigations find otherwise we will take strong action."

Consumer groups welcomed the probe. Audrey Gallacher, head of energy at Consumer Focus, says: "This is a welcome step to address years of customers getting a bad deal on energy prices on their doorstep.

"Complaints have declined since new rules came into effect this year, but suppliers still seem to be flouting the rules. Some customers are still being given misleading quotes and information, which leave them worse off when they switch provider."

Christine McGourty, director of Energy UK, which represents the major suppliers, says: "The companies involved will collaborate fully with the investigation."

Ofgem wants consumers who can help its inquiry to call 08454 040506 if they have any evidence of mis-selling.

In May, energy companies agreed to stop cold calling households who ask not to be bothered by doorstep salesmen, following pressure from watchdogs.

Ignore doorstep salesmen

If you're reading this, you have access to the internet and the best way to pick the top deal is via an online comparison site (see the Cheap Gas & Electricity guide).

When using a comparison service you are comparing all tariffs from all suppliers. When you're door-stepped by a salesman from an energy firm, he or she will only flog their company's deal, which may not be the cheapest for you.

Switching from a standard tariff where you're billed by post to an online deal can save, on average, £300 a year.

Archna Luthra, MoneySavingExpert.com consumer products analyst, says: "Any form of mis-selling is absolutely outrageous and must be stopped immediately.

"Let's hope that Ofgem means it when it says 'strong action'.

"If you're approached by a door-to-door salesman, ignore that person; the best deals are online."

Further reading/Key links

Slash energy costs: Cheap Gas & Electricity Your rights: Fight Energy Direct DebitsBoiler protection: Boiler Cover