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Fine Times Table #3

In the third instalment of our Fine Times Table series we again look at the energy market since our 2009 inception and more particularly the number of times, and amount, the Big 6 energy suppliers have been fined for various market misdemeanours.

EDF Energy has become the latest supplier to be censured by Ofgem for misdemeanours in the energy market this time for poor performance in handling customer complaints.

The issues uncovered by Ofgem’s investigation found:

  • Complaints to EDF Energy grew by more than 30% after a new IT system was deployed in 2011
  • A failure to implement appropriate procedures to receive, record and process complaints
  • High call waiting times and telephony failures
  • A failure of the company to record the details of the complaints including the date, summary and actions taken and a failure to progress the complaints

Because of what Ofgem described as EDF Energy’s approach of taking “action quickly to rectify the problems and to mitigate the effects on consumers” they have agreed a reduced sanction to be made up of a payment to vulnerable customer organizations rather than a fine levied by the regulator.

Sarah Harrison, Senior Partner for Enforcement at Ofgem, said

EDF Energy failed to have sufficiently robust processes in place when they introduced a new IT system and this led to the unacceptable handling of complaints. Their commitment to putting things right and paying £3m to the Citizens Advice ‘Energy Best Deal Extra’ scheme and the Plymouth Citizen Advice Bureau’s Debt Helpline to benefit vulnerable customers is a step in the right direction to rebuilding consumer trust.

“It’s now vital for EDF Energy and the industry as a whole to truly put customers first and put adequate resources in place to deal with complaints. Following our reforms, it has never been easier for consumers to switch supplier and therefore those unhappy with the service they receive are able to vote with their feet.”

In response Beatrice Bigois, EDF Energy’s Managing Director of Customers said:

“Despite our best efforts and extensive planning to manage this transition in 2011 without impacting our customers, we recognize that for a period of time the service to our customers was not up to the standards they deserve. We apologise to those customers who were impacted during the period.”

“The £3 million package that we are offering will ensure that thousands of vulnerable customers are provided with free, independent advice on debt, as well as information to help them manage their energy consumption and bills.”

EDF Energy’s penalty means that in total the Big 6 suppliers have faced financial penalties totalling £60,875,000 since 2010.

We’ve updated our ‘Fine Times Table’ accordingly and this is what the last 5 years of Big 6 performance have delivered:

Business Juice’s Fine Times Table – August 2014

Ofgem were clearly slow to react to misdemeanours with fines in the early years of 2009-10 however once into their stride their application, the size and regularity of punishment increased and have grown significantly in 2013/14.

In total the Big 6 energy suppliers have been fined an astonishing £61m in just 4 years

Supplier Date Fine Reason
EDF Energy Aug-14 £3,000,000 Complaints
British Gas Jul-14 £1,000,000 Mis-Selling
Scottish Power May-14 £750,000 Over-charging
E.ON May-14 £12,000,000 Mis-Selling
Npower May-14 £125,000 Reporting errors
British Gas Apr-14 £5,600,000 Transfer blocking
Npower Dec-13 £3,500,000 Mis-Selling
Npower Dec-13 £1,000,000 Billing *
Scottish Power Oct-13 £8,500,000 Mis-Selling
E.ON Jul-13 £3,000,000 Reporting errors *
SSE Apr-13 £10,500,000 Mis-Selling
E.ON Nov-12 £1,700,000 Over-charging*
EDF Energy Mar-12 £4,500,000 Mis-Selling*
Npower Oct-11 £2,000,000 Complaints
British Gas Jul-11 £2,500,000 Complaints
British Gas Jul-11 £1,000,000 Reporting errors
EDF Energy Jun-10 £200,000 Complaints

Business Juice’s Fine Times Table

The suppliers – August 2014

In ranking order, the worst transgressor, or at least the Big 6 supplier that has been fined the most is E.ON with fines totalling nearly £17m. Incredibly these have been levied in less than 2 years. EDF Energy, with this latest penalty, have now been fined more than nPower. Note that these totals do not include the fines levied on EDF Energy’s network business over the period.

Supplier Fine
E.ON £16,700,000
SSE £10,500,000
British Gas £10,100,000
Scottish Power £9,250,000
EDF Energy £7,700,000
Npower £6,625,000

The reasons – August 2014

The reasons for the fines are hugely dominated by the issue of Big 6 supplier mis-selling with a total of £40m of fines for misdemeanours in selling or nearly 70% of all fines.

Reason Fine
Billing £1,000,000
Complaints £7,700,000
Mis-Selling £40,000,000
Over-charging £2,450,000
Reporting errors £4,125,000
Transfer blocking £5,600,000

We hope the list won’t get too much bigger, especially with the CMA (Competition and Markets Authority) Investigation underway, however you can be sure that if any new fines are added we’ll reissue the latest ‘Fine Times Table’.

* Voluntary / negotiated payment in lieu of fine

Previous “Fine Times Tables” stories:

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