Concerns over doorstep selling
Trading standards experts are concerned that proposed changes around the household energy sector could see unscrupulous and potentially illegal sales tactics reintroduced once again.
The Chartered Trading Standards Institute's (CTSI) view is in response to an Ofgem consultation proposing a move from a prescriptive regulatory regime to a general principles approach.
Meanwhile, ScottishPower wants the Competition and Markets Authority to make it easier to sell energy face-to-face, including door-to-door, arguing that industry standards are improving.1
Doorstep selling was scrapped four years ago2 after it was found 52 per cent of customers who signed up to deals offered by cold-callers were actually left worse off3. CTSI called for a ban in 2009.
Steve Playle, CTSI’s lead officer for energy and climate change, said he disagrees doorstep selling helps people find cheaper deals, citing the industry's poor track record of dealing with customers.
Mr Playle said: “The average household spends around £1,3004 a year on energy so it's important to encourage customers to switch in order to make the energy market work more effectively.
“However, CTSI has concerns that a return to face-to-face marketing may lead to consumer detriment at the hands of commission-hungry sales representatives and agencies.
“Time and time again, the activities of sales reps across a whole range of sectors, including energy, have generated complaints to trading standards.
“All businesses need to be aware that deceptive, misleading and illegal sales practices are not acceptable and can lead to investigation and ultimately, prosecution.”
In 2014, energy giant E.On paid out £12 million to its customers following an investigation which found the company had broken energy sales rules. 5
The previous year Scottish and Southern Energy were fined £10.5 million after some customers were encouraged to switch onto contracts that were actually more expensive than proposed.6
CTSI is also urging caution over a Government-led scheme which will see smart meters fitted in all homes across England, Scotland and Wales by 2020.
Mr Playle said: “This could encourage energy companies to use the installation of a new meter as an opportunity to sell additional products such as insurance cover, new boilers or solar panels.
"However, there are clear guidelines governing the smart meter roll-out to prohibit this type of activity taking place and we will be keeping an eye on how things progress.
"One possible consequence of having smart meters installed is the ability to introduce complicated tariffs that charge consumers more for peak time use.
"It is a concern as this will make switching decisions virtually impossible at a time when consumers are starting to shop around to get best value for money.
"The installation of smart meters is not compulsory and only time will tell if they have the desired impact of encouraging consumers to reduce their energy consumption."
In 2009, CTSI called for a ban on energy doorstep selling at its annual conference, in Brighton, after the issue was debated with industry professionals.
Notes for Editors:
1 ScottishPower consultation submission to CMA Energy market investigation https://www.gov.uk/cma-cases/energy-market-investigation
2 E.On last of the 'Big Six' to end doorstep selling in 2012 http://www.bbc.co.uk/news/business-18708161
3 Ofgem Energy Supply Probe Initial Findings Report (Section 9.15)https://www.ofgem.gov.uk/sites/default/files/docs/2008/10/energy-supply-probe---initial-findings-report.pdf
4 The average annual dual fuel bill over the next 12 months will be £1,292. This is £3 lower than last month’s estimate and around £50 lower than our estimate a year ago. Average gas and electricity bills are estimated to be £706 and £603 respectively https://www.ofgem.gov.uk/gas/retail-market/monitoring-data-and-statistics/understanding-energy-prices-great-britain/supply-market-indicator
5 E.ON to pay £12 million package following Ofgem mis-selling investigationhttps://www.ofgem.gov.uk/publications-and-updates/e.-pay-%C2%A312-million-package-following-ofgem-mis-selling-investigation
6 Ofgem fines SSE £10.5 million for mis-selling https://www.ofgem.gov.uk/publications-and-updates/ofgem-fines-sse-%C2%A310.5-million-misselling
SSE were convicted of offences under the Consumer Protection from Unfair Regulations and fined £1.25m following a prosecution by Surrey Trading Standards http://www.bbc.co.uk/news/business-17960877