The investigation of four energy companies, including ScottishPower and Scottish and Southern Energy, over claims that they have breached regulations on door-to-door and telephone sales is particularly alarming because those who sign up to such deals are likely to be among the most vulnerable and least informed customers.
Checks by the regulator Ofgem have already found that some of the poorest customers, those on pre-payment meters, who switched suppliers after approaches by doorstep salesmen were worse off. Twenty years after the introduction of competition, there is considerable evidence that those on the lowest incomes have benefited least from the open market. Part of the problem is that with around 4,000 different tariffs on offer, those most likely to switch suppliers to secure the best deal are people with access to computers and comparison websites.
That makes approaches from companies a potentially useful source of information and banning them would be a retrograde step. The regulations require companies to provide customers with written estimates before the sale is agreed so that they can compare the new offer with their current deal. This would be better known if companies were required to state it on bills.
The recent toughening of the regulations has not yet solved the problem but the ultimate sanction remains the imposition of fines on the companies of up to 10% of their annual turnover. This could amount to hundreds of millions of pounds for the two Scottish companies and the others under investigation if they have mis-sold payment agreements. The regulator is right to fine those which breach the rules but it must ensure that the cost is felt in the companies’ profits and not in the customers’ pockets.
