UK
16/05/2014 04:21 BST | Updated 16/05/2014 04:59 BST

Energy Firm E.ON Must Pay Record Sum Of £12m To Vulnerable Customers After Mis-Selling

Power transmission lines run from electricity pylons in Braintree, U.K., on Wedenesday, Sept. 25, 2013. Britain's business lobby groups said that Labour leader Ed Miliband opposition's proposal to break up the 'Big Six' utilities and cap power prices threatens the investment needed to avoid blackouts by the end of the decade. Photographer: Chris Ratcliffe/Bloomberg via Getty Images
Bloomberg via Getty Images
Power transmission lines run from electricity pylons in Braintree, U.K., on Wedenesday, Sept. 25, 2013. Britain's business lobby groups said that Labour leader Ed Miliband opposition's proposal to break up the 'Big Six' utilities and cap power prices threatens the investment needed to avoid blackouts by the end of the decade. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

Energy supplier E.ON is to pay a record £12 million to vulnerable customers after an investigation found it broke energy sales rules over a three-year period.

Regulator Ofgem said the redress package reflects the harm caused by E.ON's extensive poor sales practices between June 2010 and December 2013. Given the large number of contracts signed in this period Ofgem said it was likely a large number of customers were mis-sold to by E.ON.

Ofgem said that E.ON failed to properly train and monitor its staff and those it employed through third party telesales agencies, leading to incorrect information being provided to customers on the doorstep and over the phone.

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Regulator Ofgem said the redress package reflects the harm caused by E.ON's extensive poor sales practices

As part of the redress package, E.ON will pay around £35 to 333,000 of their customers who are normally recipients of the Warm Home Discount. It will also make automatic payments to some vulnerable customers who may have been affected by the poor sales practices.

The company has set up a dedicated hotline and will write to around 465,000 customers it has identified through its redress work in order to see if they are entitled to compensation.

E.ON chief executive Tony Cocker said as part of overhauling its sales operations the company has ended face-to-face sales and outbound residential telephone cold calling.

He added: "It is completely unacceptable that we may have been unclear with customers about their tariff choices and as a result those customers may not have made the best choices for them.

"There was no organised attempt to mislead, and Ofgem has acknowledged this, but that does not excuse the fact we did not have in place enough rules, checks and oversight."

Since 2010, Ofgem has imposed £100 million in fines and redress on energy companies for various rule breaches, including £39 million for misselling.