E.ON is the latest big six supplier to incur a fine from energy regulator Oftem, this time for erroneously charging its customers in two different ways.
After a two-year investigation into mis-selling conducted last year (which resulted in a fine of £12 million), Ofgem was later notified of issues regarding erroneous cancellation fee applications and overcharging of E.ON customers.
Under new rules regarding price rises, customers must be alerted to price rises and given ample time to switch away from the supplier to avoid the higher prices. If the new prices come into effect before the switch has been processed, the customer must not be charged the higher price, or be charged a cancellation fee for leaving.
The supplier itself notified Ofgem of the breach of these rules, and is already in the process of paying back affected customers — it is estimated they are owed £400,000. Today the regulator announced the supplier would also be responsible for paying the fine for breaking the rules, to the tune of £7.5 million. This amount is to be paid to Citizens Advice, a free service that provides independent advice to consumers.
E.ON also issues an open apology to customers:
“Although the underlying reasons are different, this is not the first time that E.ON has made this error and the company sincerely apologises to those affected,” reads a statements on their website. “E.ON has agreed with Ofgem to carry out an independent external audit relating to the specific breaches and to implement any appropriate recommendations.
“E.ON has been open and transparent about this failure to Ofgem and has agreed to make a payment to Citizens Advice which will be used to support its Energy Best Deal Extra engagement programme, which provides face to face energy advice.
“E.ON is committed to ensuring that no one will lose out financially and is pleased that the payment is going to a worthwhile cause that will provide support to those in need.”
Tough action helps ensure fairness
In its announcement, Ofgem explained the purpose of the fine in regards to its rules:
“Ofgem’s rules give customers a chance to avoid exit fees and higher costs when suppliers put up prices. These are important customer protections and it is vital that suppliers play by the rules so customers are encouraged to engage in the market.
“E.ON’s errors meant customers who took the chance to switch were wrongly charged. It is important that E.ON has repaid potentially affected customers and cooperated with the investigation. However it’s absolutely unacceptable that E.ON failed to provide these vital customer protections yet again and this persistent failure is the reason for the high penalty.”
Ann Robinson, Director of Consumer Policy at uSwitch, agreed the penalty fit the breach, and hopes this keeps consumers from losing even more faith in the energy industry:
“Today’s penalty shows tough action by the regulator and should serve as a warning to the industry that customers must be treated fairly.
“Many consumers find energy bills difficult to understand at the best of times, so it’s essential that they have total confidence that their bills are fundamentally correct.
“It’s encouraging to see E.ON is taking its penalty seriously and has made significant steps to put these errors right.”