Move to end energy mis-selling

Suppliers must abide by the new code of practice

Victims of energy mis-selling may receive automatic compensation, after a new code of practice was launched at a government and industry summit in London on Monday.

The code makes it a licence condition that energy companies abide by the new rules, which include paying up to £250 in cases of proven fraud.

Energy companies were 'put on notice' six months ago by Energy Minister Brian Wilson after a dramatic rise in the number of complaints.

Cases of forged signatures, intimidation and false claims that contracts were agreed on the telephone forced the minister to take action.

Rogue salesmen

"I called on the industry to clear up the debris left by rogue salesman," said Mr Wilson.

"It was crucial that the industry should drive mis-selling out of the market-place and put an end to practices which were giving the whole industry a terrible reputation."

"Quite a lot of progress has been made but there is still abundant evidence that some salesmen will go to any lengths to win business." he said.

The minister said he was appalled to learn that some of the most vulnerable members of society had become victims.

Asylum seekers

"Salesmen have been targeting refugees and asylum seekers, some of whom have little understanding of English, and certainly no understanding about energy markets, and persuading them to sign contracts." he said.

Complaints to consumer watchdog Energywatch are still running at a rate of between 15-20,000 a year.

In October, London Electricity and its affiliate company Virgin Energy was fined £2m by Ofgem for failing to stop its sales staff from mis-selling to customers.

"Only the start"

The regulator found agents were using information from people who had died or details from the electoral register to fill out supplier transfer forms.

There were also examples of high pressure door-to-door tactics and incidents of salesmen confusing people into switching suppliers without their knowledge.

Mr Wilson said the £2m fine was "only the start" and that power companies who had not done so would be "well advised to get the message now".

BBC Radio 4's Money Box was broadcast at 12pm on Saturday, 14 December 2002.