Npower to face mis-selling probe

There have been allegations that potential customers were misled

Utility firm Npower is to face an investigation by the energy regulator over allegations about sales tactics.

Ofgem has announced the probe following claims that the company's sales representatives have been mis-selling energy contracts to customers.

Npower suspended 17 members of staff a fortnight ago after an undercover reporter claimed some sales staff misled potential customers.

Npower said it would co-operate fully with the investigation.

Rules state that customers must be aware they are entering a contract.

In a short statement Ofgem said the investigation was being carried out under its powers to enforce licence conditions.

"The decision to investigate follows recent allegations that Npower sales representatives have been mis-selling energy contracts to customers," the regulator said.

Penalties

The probe is the first for alleged mis-selling since London Electricity, now part of the EDF group, was fined £2m by the regulator in 2002 after being found guilty of breaching the rules.

Since then, Ofgem says that complaints about mis-selling have dropped significantly.

The investigation is expected to take months, rather than weeks. If found to be breaking the rules, Npower faces a fine of up to 10% of its global turnover.

In a statement, Npower said: "We were very concerned at the actions of a small number of individuals in a London sales team as reported in the Sunday Times.

"We took swift action to take the team off the road and investigate the problem. Following an in-depth investigation by our audit team, disciplinary hearings will be scheduled shortly.

"We cannot prejudge the outcome of these meetings but the penalty for fraudulent activity is dismissal."

Npower said all its sales staff have been brought in for a talk on the regulations, a mystery shopper scheme has been introduced, and every week 2,000 people who have been approached by Npower staff are to receive a call to check they were happy with the way they were dealt with.

Speaking about the allegations, Adam Scorer of consumer watchdog Energywatch said: "More than 100 consumers contact us each month to complain about Npower's marketing tactics."

"No consumer should be subjected to such bully boy behaviour and such poor service."