2nd Apr 2015 07:48
LONDON (Alliance News) - UK electricity and gas regulator Ofgem Thursday said it has fined E.ON GBP7.8 million for incorrectly charging customers exit fees and overcharging customers following price rises.
Ofgem said the fine was in addition to the GBP400,000 E.ON has previously paid back to customers for the same reasons. The GBP7.8 million fine will be paid to the Citizens Advice to help vulnerable consumers, said the regulator.
Under Ofgem rules, suppliers have to give customers 30 days' notice of a price rise, giving them a chance to switch before the increase takes effect. If a customer signals their intention to move supplier within the 30 days they do not incur exit fees or the higher charge even if the switch occurs after the price rise.
"E.ON's errors meant customers who took the chance to switch were wrongly charged. It is important that E.ON has repaid potentially affected customers and cooperated with the investigation," said Sarah Harrison, senior partner in charge of enforcement at Ofgem.
Ofgem found that E.ON made billing errors in respect of price rises in January 2013 and January 2014 which affected direct debit and standard credit customers. The average amount paid back by E.ON was GBP8 for direct debit customers and GBP12 for credit card customers.
"E.ON has made refunds to around 40,000 customers; however the number of customers actually affected by the issue is likely to be significantly less," said Ofgem.
"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," said Harrison.
The same rules apply to prepayment customers, and Ofgem said it received information that E.ON's prepayment customers were also being affected by the company's billing errors "very late" in its investigation.
E.ON's error resulted in around 500 prepayment customers for the January 2013 price increase and around 6,500 prepayment customers for the January 2014 price increase missing out on average a refund of GBP3.42 each, said Ofgem. E.ON is tracking down these customers to provide refunds by the end of April.
"This error and the delay in providing the information is serious and E.ON has failed to protect these consumers. Ofgem has taken this into account in determining the level of penalty," said Ofgem. "The level of penalty package today also reflects that E.ON has made the same error previously as well as making senior level commitments that it rectified its processes."
"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," said Harrison.
By Joshua Warner; [email protected]; @JoshAlliance
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