One of the Big Six energy companies, npower, has agreed to pay a £3.5 million fine after an Ofgem investigation discovered it had breached sales rules.
Ofgem has announced that the money will be put towards helping “vulnerable customers”. They will pay £25 per house for customers eligible for the "warm home discount", who are usually over 60 years of age and receiving pension credits.
The gas and electricity regulator imposed the fine after finding that npower had breached the rules governing how energy deals can be sold on customer doorsteps and over the phone.
The fimr failed to get enough necessary information from potential customers about energy consumption to enable them to decide if it was worth switching from their current energy provider.
In a statement, npower say that “all the issues Ofgem identified have since been resolved” and it will contact all the customers that have been affected by the breaches, specifically outlining the measures it will be taking.
Ofgem’s investigation found weaknesses in npower’s sales processes, which meant that customers were unable to compare offers from rival suppliers fairly. The breaches of these "tougher" 2009 marketing rules ceased by September 2012.
Sarah Harrison, Ofgem's senior partner in charge of enforcement, said: "Ofgem will continue to hold companies to account to ensure rules to protect energy consumers are met and that the market works for consumers in a simpler, clearer and fairer way.”
Accepting the ruling, npower chief executive Paul Massara said: "We've worked very closely with Ofgem as they've investigated these previous issues.
"It's good to draw a line under this, so we can focus on our goal of becoming number one for customer experience by the end of 2015."
The company has announced that the £3.5 million penalty will be used to make a £25 payment to each of its "warm home discount" customers in the form of an account credit or a prepayment meter top-up.
This is not the first time npower has been fined by the regulator: Ofgem charged it £1.8 million in 2008 for mis-selling.
Consumer Futures, the official consumer watchdog, welcomed Ofgem’s decision to fine npower.
Adam Scorer, director of Consumer Futures, said: “"Mis-selling is the original sin of energy competition. Npower had misled customers by phone and on the doorstep from 2010. Many people who would have been looking for the best deal found themselves poorly treated."
Npower is not the only energy company to be investigated by Ofgem. Scottish Power agreed to pay a penalty of £8.5 million in October and EDF Energy agreed to pay £4.5 million to vulnerable customers following breaches to marketing rules in 2012.
Ofgem is currently conducting an ongoing investigation into E.On.
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