The regulator found sales representatives of the energy company had made “misleading and unsubstantiated statements” to potential customers about savings they could make.
One inaccurate doorstep script used in the north of England said: “What I’m here to do today is show you a government thing called deregulation which results in your energy prices being lowered by doing nothing at all.”
Management “consistently failed, over a prolongued period of time” to root out the bad practice. Even after SSE stopped doorstep selling in July 2011, problems persisted in phone and in-store sales.
“SSE failed its customers, missold to them and undermined trust in the energy supply industry,” said Ofgem senior partner in charge of enforcement Sarah Harrison.
“These failings did not just take place on the doorstep but also in the management of SSE. Ofgem’s fine reflects an absence of effective management control over energy selling.
“Today’s fine sends a clear message to suppliers that Ofgem will hold to account those companies which fail to treat consumers fairly. It is time for the energy industry to take note.”
This follows a £1.25 million penalty imposed by Surrey Trading Standards last May, which was the heftiest fine to have been brought in a trading standards case.
A statement from SSE said the company “is deeply regretful that breaches occurred” and apologises “unreservedly” to customers.
William Morris, managing director of retail, admitted the company had not spent enough time monitoring sales processes. “That meant we did not always sell in the right way, and we let some customers down,” he said.
The firm has now “transformed” its processes. It has a £5 million compensation fund for those who can show they switched to SSE after being given innacurate information. Some £400,000 has been claimed so far.
Ofgem investigations into Eon, Scottish Power and Npower over mis-selling concerns continue. A case against EDF Energy was dropped after the company agreed to provide £4.5 million in redress to affected customers.