Npower pays £3.5m to settle charges of energy mis-selling

Npower has agreed to pay £3.5m to settle charges of sales mis-selling by energy regulator Ofgem.

An investigation by the watchdog upheld complaints that Npower, one of the UK's six leading gas and electricity retailers, had breached sales rules on the doorstep and over the phone in an effort to encourage consumers to switch to its services or retain customers.

Under the terms of the deal struck with Ofgem, Npower will make a payment of at least £25 to each of its customers who are part of its Warm Home Discount payment scheme aimed supporting vulnerable customers.

The penalty agreed with Npower is the latest in a series of fines imposed on the energy suppliers, who have also faced a storm of political attacks after announcing inflation-beating price increases in recent weeks.

Sarah Harrison, Ofgem's senior partner in charge of enforcement, said though Npower had made changes to improve its sales processes, "weaknesses remained which affected consumers' ability to compare supplier offers fairly".

She added: "These issues have been fully addressed by Npower and Ofgem welcomes the company's actions and its agreement to pay £3.5m to directly benefit vulnerable consumers."

Npower said the investigation dates from 2010 to 2012 and all the issues Ofgem identified had since been resolved.

Paul Massara, Npower chief executive, said: "We've worked very closely with Ofgem as they've investigated these previous issues. It's good to draw a line under this."

The settlement is the latest financial penalty imposed by Ofgem following a wave of investigations into mis-selling.

In October Scottish Poweragreed to pay out £8.5m after an investigation by the UK energy regulator found the company had misled customers. Scottish Power was forced to pay £7.5m to vulnerable customers and £1m in compensation following Ofgem's judgment.

Rival Scottish and Southern Energy, which was convicted in court of unfair trading in 2011, accepted a record fine of £10.5m from Ofgem relating to telephone, in-store and doorstep mis-selling in April this year.

Last year EDF Energyagreed to pay £4.5m to customers after the regulator found it had also breached marketing rules.

Ofgem has yet to announce the outcome of another investigation into alleged mis-selling by Eon. Eon was separately fined £3m in July over failing to properly distribute free compact fluorescent lamps to customers under a subsidised energy saving scheme.

Adam Scorer, director of Consumer Futures, said: "Mis-selling is the original sin of energy competition. Npower had misled customers by phone and on the door step from 2010."

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