British Power Company apologizes for misselling to consumers

We're in the habit of collecting and sharing corporate apologies here, and last week, there was a big one. After being fined £10.5m by regulator Ofgem, natural gas and electricity supplier SSE posted an apology on the front page of its website (image above) and a longer letter from Ian Marchant, its CEO, on the company blog.

Ofgem described SSE's issues this way:

Customers contacted by SSE were exposed to misleading statements, inaccurate and misleading information on SSE’s charges and misleading comparisons between SSE’s charges and the costs with other suppliers. These failures meant that many customers were unable to make well-informed decisions about whether to switch to SSE and about comparing products in a competitive market, and they were exposed to the risk of choosing a more expensive energy deal. Customers were also told that they could save more money on switching to SSE than was possible.

The SSE apology reads, in part:

The breaches of licence conditions on which the fine is based should never have happened and it is simply not acceptable that they did. Our failings have context – the obligations on energy suppliers were changed significantly and we had a lot to do to change our practices – but there is no excuse; we should have done better.

Today’s announcement is also a clear message for energy companies. Ofgem has been saying for some time that energy suppliers need to transform the way they deal with customers. We agree and we believe that through our Building Trust programme we have led the industry in translating words like fairness, simplicity and transparency into action. We’ve reduced the number of tariffs we offer, we’ve simplified bills, we check that customers are on the best deal for them and we’ve stopped doorstep sales. We've strengthened the compliance processes in our retail business.

The reality is, however, that while SSE has taken a lead on this, Building Trust only started in October 2011 and took a while to implement. However, in many ways it was two years too late. In October 2009, Ofgem introduced new obligations on energy suppliers to make sure sales are conducted in a fair and transparent manner and, frankly, we should have complied with the letter and the spirit of the rules.

We didn’t respond quickly enough to those new obligations and, in particular, we were too slow to recognise that the sales methods sometimes used on doorsteps of potential customers were unacceptable. While SSE was first out of the blocks on this issue, stopping doorstep sales in July 2011, before any other major supplier, we were still much too slow.

This apology has a lot to like, although Marchant leaves the impression that the "Building Trust" program was a proactive step the company took. In fact the Ofgen investigation started in 2010 and Building Trust would certainly have been a response to that investigation. If Building Trust had been launched before the investigation, I would have given SSE much more credit.

[Thanks to Iain Nisbet from www.absolvitor.com (Absolvitor: Scots Law Online) and facebook.com/absolvitor for sharing this story.]