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Economy Energy to pay £250,000 for mis-selling and management failings

  • Economy Energy’s customers were affected by mis-selling between October 2012 and December 2013.
  • Ofgem finds systemic failures in Economy Energy’s management oversight. 
  • Yesterday’s £250,000 payment by the supplier will go to help Citizens Advice provide energy advice to consumers. 

Ofgem has yesterday secured £250,000 from Economy Energy following mis-selling and poor communications by the supplier. Ofgem’s investigation found that Economy Energy did not have adequate processes and procedures in place between October 2012 and December 2013, and senior management failed to ensure it was complying with the regulator’s rules.

Economy Energy mis-sold energy contracts between October 2012 and December 2013. Inadequate training and a lack of management oversight contributed to sales agents quoting inaccurate comparative savings, providing a misleading guarantee of cheaper prices than those offered by the six largest suppliers, and failing to behave fairly and professionally. The supplier also didn’t make it clear to prospective customers that they would be signing up to a 12-month contract. Economy Energy has already paid over £23,000 to nearly 500 affected customers, and Ofgem expects the supplier to do more to identify and compensate any remaining affected customers. 

Economy Energy also failed to give advance notice of price increases in April and November 2013, affecting up to 70,000 customers. Customers were therefore not given the opportunity to switch before the price increases took effect. Some who were moved to a more expensive tariff reclaimed their money, and Economy Energy gave £100,000 of unclaimed cash to the National Children’s Bureau to help families living in fuel poverty. 

Anthony Pygram, Ofgem’s senior partner with responsibility for enforcement said:“Economy Energy let its customers down badly. These were predominantly prepayment customers who are more likely to be vulnerable and Economy Energy failed to protect them. Economy Energy has taken steps to improve its practices during the investigation. We now expect it to treat its customers fairly and act in line with its obligations at all times.

“We welcome new suppliers into the market, but as an essential service provider they must abide by rules and treat customers fairly, especially where vulnerable customers are concerned. Failure to do so contributes to a lack of trust and engagement in the energy market.”

Notes to editors

Ofgem’s investigation also looked at whether Economy Energy incorrectly charged exit fees when customers switched (SLC 24.3) and whether it provided written estimates to customers (SLC 25.9). There was no finding of breach in relation to these two aspects of the investigation

About Ofgem

Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.

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For further press information contact:

Dafydd Wyn: 020 3263 9943
Out of hours media contact number: 07766 511470

Related links

Investigation into Economy Energy’s compliance with SLCs (Standard Licence Conditions 23, 24 and 25)

 

Channel website: https://www.ofgem.gov.uk/

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