Big six energy firm SSE is to pay a £1 million fine after it sent inaccurate and misleading information to some pre-payment customers.
An investigation into the supplier was launched in November last year after the firm reported the issue to the regulator.
Between June 2014 and September 2015 SSE sent out 1.5 million incorrect annual energy statements to 580,000 pre-payment customers.
SSE sent out 1.5 million incorrect statements to 580,000 pre-payment customers
The error has been blamed on an IT coding error.
The statements contained inaccurate information about cheaper tariffs available to customers, and the savings they could make by switching to one.
The estimated savings of changing a pre-payment meter to a standard credit meter, and of changing to paperless billing, were also incorrect in some cases.
Ofgem said the overall level of harm caused by the error was low as only a very small proportion of customers will have acted on the information given and switched tariffs. The fine will go towards supporting vulnerable energy customers across the UK.
Ofgem also said SSE failed to act promptly to put things right when the statements were sent out. The energy firm didn’t identify the problem early enough and when it did realise what had happened, the issue wasn’t escalated correctly.
Ofgem also said SSE also failed to put in place ‘fit for purpose’ processes when it comes to customer communications.
Since this happened, Ofgem said: ‘SSE has since improved its processes to prevent this from happening again.
‘This includes carrying out extra checks on their customer communications before issuing them and giving more resources to the teams involved.
‘Ofgem has now closed this case without taking formal enforcement action, taking into account the steps that SSE has since taken to address its failings and, considering the low level of harm identified, the redress it has agreed to pay.’
SSE reported the issue to the regulator last year and will now pay £1 million to Ofgem
The £1 million will go to Ofgem’s consumer redress fund, which is administered by the Energy Savings Trust. This supports consumers in vulnerable situations and the development of innovative products or services not currently available to energy consumers.
Gareth Wood, director of customer service operations for SSE, said: ‘We deeply regret the historic problems we identified with some annual statements for pre-payment customers, relating to a coding issue between 2014 and 2015.
‘We proactively reported this to Ofgem once we became aware and, as Ofgem has recognised, we’ve put things right and now have stronger measures in place to help ensure it doesn’t happen again.
‘Although we’re disappointed not to have met the high standards expected of us in this instance, we’re pleased that the matter has now been closed with a voluntary payment that will directly benefit vulnerable customers.’
Pre-payment customers typically pay higher rates than consumers with standard credit meters, and they have less choice because there are not as many tariffs to choose from.
To combat this, last year Ofgem introduced a price cap for all customers with a pre-payment meter. This was to ensure that these customers weren’t being unfairly charged and were not paying significantly more than those with a standard meter.
However, in April this year Ofgem increased the cap which added around £57 per year onto the bills of around five million energy customers to which it applies.
At the time the regulator blamed the increase on rising wholesale energy costs and said consumers were still be better off with the price cap.
Join our Energy Switch Club to beat the suppliers at their own game
All of the Big Six energy giants have announced eye-watering price hikes in recent months pushing up families’ annual energy bills up to a an eye-watering £1,151.
But households can, and should, fight back by upping sticks and moving to a better deal.
This is Money has joined forces once more with energyhelpline to launch a new collective switch to help readers save money on energy bills.
The Energy Switch Club allows our readers to team up with thousands of other people and use their collective power to negotiate a unique offer on their energy bills.
Our last collective switch earlier this year saw over 73,000 people sign up, allowing us to negotiate and exclusive tariff that saved the average switcher £255.
This special deal turns the table on energy firms – rather than households having to hunt out a better price, they will be competing to offer you one.
You can register with just a few details here and once we have picked the winning deal we will deliver a unique tariff straight to your inbox on June 20.
If you decide to switch and save money you can. If you decide it is not for you then you do not have to take it.
- Not interested in taking part but want to search for a better deal? For full details of how to switch your provider and where to find the best deals check out This is Money’s switching guide.