Energy firms should pay compensation for doorstep mis-selling, MPs say

The Energy and Climate Change select committee is concerned customers bamboozled by the array of complex energy tariffs are being pressured by salesmen into contracts with different suppliers no better, or even worse, than their current one.

Key Points

• MPs want end to 'Del Boy tricks'

• 'Customers bamboozled by array of complex tariffs'

• They urge companies to take action without waiting for Govt or Ofgem

Tim Yeo, chairman of the select committee, says: "If it turns out consumers are being persuaded to switch contracts when it's not in their best interests, by salespeople keen to earn commission, then it would only be right for the energy companies to cough up compensation."

He urges companies to take action themselves without waiting for the Government or Ofgem to act.

Scottish & Southern Energy (SSE), one of the big six group of energy suppliers, recently suspended all of its doorstep activity after being found guilty of two counts of mis-selling in a case brought by Surrey County Council.

SSE, which is appealing against the Surrey verdict, says the market had changed, with fewer people willing to engage with traditional doorstep sellers.

Yeo welcomes SSE's decision and urges the rest of the big six to ditch the "Del Boy tricks" and concentrate on giving customers the information they need to choose the correct contract. British Gas has also hinted it may cease doorstep sales.

A spokesman for the regulator Ofgem says: "The select committee is right to highlight the issue of compensation for customers.

"Ofgem's recent review of the retail market signalled that there may be a case for additional powers for the regulator to better protect and put right problems for consumers."

Price rise worries

The select committee also says it is concerned over recent rises in energy prices, the growth in the complexity of tariffs and the dominance of the market by six big suppliers.

Consumer organisation Which? estimates the number of tariffs available to energy customers has risen from 180 to 400 in the past 18 months even though 99% of all domestic accounts have been held by the big six suppliers since 2008.

Scottish Power, which is owned by Spanish firm Iberdrola, was the first of the big six to raise its prices for gas and electricity this year when it increased its gas tariff by an average of 19% and its electricity tariff by 10%.

In its report, the select committee criticises Scottish Power for the way it has structured the increases, claiming those who use least energy will be hardest hit.

Some 73% of Scottish Power's pre-payment customers in 2010 came from the doorstep while SSE, which has just announced price increases of 18% for gas and 11% for electricity, says 45% of the new customers gained in the UK came from door-step selling.

Consumer groups welcomed the MPs' report. Mike O'Connor, chief executive of Consumer Focus, says: "This is a broadside from MPs on whether consumers can trust energy companies to sell fairly, especially on the doorstep. Cold calling on the doorstep should end now.

"Organised confusion, pressured selling, misleading information - no market should be able to operate like that, and especially not one that provides an essential product that is getting more and more expensive."

He adds Ofgem needs to take a firm grip on the market and "set it on the right course for the enormous changes we will all face."