MPs accuse energy companies of incentivising salesmen to lie
Energy companies should be subject to a major investigation for doorstep mis-selling and forced to pay back money they have wrongly taken from consumers, according to a panel of MPs.
The doorstep mis-selling of energy is a problem, MPs warned
By Rowena Mason, Energy Correspondent 6:15AM BST 12 May 2011
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The Energy Committee said the problem could be as "serious" as the banks' mis-selling of payment protection insurance (PPI), which may cost Lloyds Banking Group £3.2bn in compensation for consumers.
It comes after Scottish and Southern was convicted on Wednesday by a Surrey court of mis-selling to customers. It is one of four companies, alongside EDF, ScottishPower and RWE, being scrutinised by Ofgem over allegations that doorstep salesmen are not straight with customers when encouraging them to switch tariffs.
Tim Yeo, chairman of the committee, told bosses from the big six - RWE npower, EDF, E,ON, Scottish & Southern, Scottish Power and British Gas - that he is considering whether to refer them for a fuller inquiry.
"Do you think we should be recommending to the Government that they should be investigating the energy companise for the same sort of thing [as PPI]?" Mr Yeo asked. "Because it sounds a bit like that to us. You've got guys out there incentivised to lie to consumers to sell them products that are more expensive than the alternatives. It looks to me like quite a serious issue.
"We've got a responsibility to put a stop to this rather soon and pay back that money which you've taken from them which they shouldn't have paid."
Barry Gardiner, a Labour MP, challenged bosses to stop trying to persuade customers to switch tariffs on the doorstep and accused them of targeting the "poorest and most ignorant" members of society.
"Why are you even on the doorstep?" he said, in a heated exchange. "Not one of you have or would recommend that your children should buy any of these products on the doostep. Think about that and then think about disbanding your sales forces."
Alistair Phillips-Davies, energy supply director at SSE, admitted that some of the companies doorstep salesman make more than 50pc of their salaries through commission. However, he said the company may appeal Wednesday's court ruling, adding: "We do not set out to lie to customers."
The other companies vigorously denied any mis-selling, although David Mannering, director of economic regulation at RWE npower, admitted that there may be the odd "rogue agent".
Earlier in the hearing, the energy bosses hit back at claims that they have been profiteering from rising gas prices, warning that there are genuine economic reasons why higher bills may be on the way.
Ofgem, the regulator, has accused the suppliers of raising prices for consumers quicker than they lower them when wholesale energy costs change.
However, six bosses said criticisms of their profitability are "flawed", adding that "continuous inflation" might be a reason for Ofgem's findings.
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