Energy giant E.ON has been fined £7.75 million by regulator Ofgem for overcharging its customers who wanted to switch supplier.
Ofgem said the company had committed ‘repeated failings’ on billing rules after incorrectly imposing exit fees following price rises in January 2013 and January 2014.
Suppliers are not supposed to apply exit fees if customers notify them of their intention to switch within 30 days of the announcement of a price rise. The ruling still applies even if the switch takes place after the rise is in effect.
Ofgem’s Sarah Harrison said: “Ofgem’s rules give customers a chance to avoid exit fees and higher costs when suppliers put up prices. These are important customer protections and it is vital that suppliers play by the rules so customers are encouraged to engage in the market.”
It’s not the first time E.ON has been fined for the practice. They were forced to pay £1.7 million in November 2012. The second infringement is the reason they have been hit with a higher penalty.
Ms Harrison commented: “It’s absolutely unacceptable that E.ON failed to provide these vital customer protections yet again and this persistent failure is the reason for the high penalty.”
The latest fine was imposed by Ofgem, but the cash will be given to the charity Citizens Advice to support their work in advising consumers on energy matters. It is in addition to the £400,000 E.ON is in the process of re-paying to customers who were overcharged.
Citizens Advice runs a special Energy Best Deal Extra scheme. It provides face to face advice for consumers who are considering switching their supplier and helps them to decide where to buy their energy.
In May 2014 E.ON was ordered to refund £12 million to customers after an Ofgem investigation into mis-selling found ‘extensive poor practices’ and senior management at the firm had failed to ensure sales staff were properly trained and followed the rules.
EON chief executive, Tony Cocker, apologised for the failings and promised the firm would be ‘putting this right.’ He also confirmed that the practices of doorstep selling and cold calling had both ended.
“It’s absolutely unacceptable that E.ON failed to provide these vital customer protections yet again and this persistent failure is the reason for the high penalty.”