New compensation rules for energy complaintsCompanies could be forced to pay redress to customers
10 April 2012
Energy companies could be forced to compensate customers for mis-selling and overcharging, under new proposals being debated by the government.
Ofgem, the energy regulator, can currently fine companies, but the money goes to the government rather than being returned to consumers.
The new rules will allow the regulator to force companies to give money directly to those who have been affected.
Compensation for consumers
Richard Lloyd, executive director of Which?, said: 'It's only fair that consumers are properly compensated when they have lost out due to energy companies overcharging or mis-selling.'
Since 2007, Ofgem has issued more than £18m worth of fines to energy companies. In January 2012, it issued a total of £4.5m in fines to British Gas and Npower after poor handling of customer complaints.
Energy company fines
At the moment, any fines paid by the energy companies go straight to the Treasury. Although energy companies can voluntarily compensate customers, the regulator does not have the power to force them to do so.
This is in contrast to other regulators, such as the telephone regulator Ofcom and the Financial Services Authority (FSA), both of which can force companies to compensate customers if they are found to have mis-sold products.
Mr Lloyd added: 'We have been campaigning for Ofgem to have these powers, as it has a duty to protect customers and should be able to force suppliers to provide redress for customers, as other regulators do.'