UK electricity suppliers agree on code for sales force

9 December 2002 – A meeting today of the UK’s major gas and electricity suppliers and industry watchdog Energywatch is to lead to the agreement of a code of practice aimed at stamping out mis-selling and which could result in automatic compensation to consumers for breaches.

The development was hailed by energy regulator Ofgem as a significant step towards stamping out the mis-selling of gas and electricity supplies. The code of practice, developed in consultation with Energywatch, the industry and Ofgem, commits all the major energy suppliers to higher standards in energy sales, and includes a commitment to pay compensation to customers affected.

Energywatch has called for automatic compensation for consumers, who are victims of mis-selling, to be a condition of a company’s licence to provide gas or electricity . “Six months ago, energy minister, Brian Wilson, and Energywatch, put the gas and electricity companies on notice to clean up their acts and stop mis-selling to consumers , including forging signatures and telling lies, intimidating vulnerable people, and falsely claiming contracts were agreed on the telephone”, said Energywatch chairman Ann Robinson.

Complaints to Energywatch about mis-selling are running at a rate of between 15-20 000 a year. “We are working with industry to develop a code of practice which would provide automatic compensation to victims of mis-selling, for example £250 ($394) for forgery”, said Robinson.

Energywatch called for Ofgem to make the code of conduct a licensing condition within 3 months from now if no improvement was evident.

Ofgem Chief Executive, Callum McCarthy, said, “At the May summit, Ofgem warned the industry that we would act against misselling. In November, we confirmed a £2 million financial penalty against London Electricity. Enforcing the rules against misselling continues to be a high priority for Ofgem.

“We are pleased the industry has recognised that it must put an end to lax management of sales agents by creating this code of practice. Ofgem supports self-regulation and we have high expectations of the benefits this code will deliver. Of course, it is only by monitoring how it works in practice will we know if it is successful.

Ofgem is now calling on suppliers to implement the code in full, setting up a strong, independent, fully funded administrator with powers to penalise suppliers for any breach.