Energy supplier E.ON will pay out £12m (€14.7m) to vulnerable customers for breaking energy sales rules between June 2010 and December 2013.
An investigation by the Office of Gas and Electricity Markets (Ofgem) revealed that E.ON’s management arrangements were insufficient to protect against mis-selling to the customers.
The Ofgem said that the redress package reflects the harm caused by E.ON’s extensive poor sales practices carried out for three years.
A large number of contracts were given to the company during this period and the regulator said it was likely a large number of customers were mis-sold to by E.ON.
The regulator’s investigation revealed that E.ON failed to properly train and monitor its staff and those it employed through third party telesales agencies, resulting in incorrect information being provided to customers on the doorstep and over the phone.
As part of the redress package, E.ON has agreed to pay around £35 (€42.9) to 333,000 of its customers who are normally recipients of the Warm Home Discount. The company will also make automatic payments to some vulnerable customers who may have been affected by the poor sales practices.
E.ON has established a dedicated hotline and will write to approximately 465,000 customers it has identified through its redress work, guiding them on how to get in touch to find out whether they were mis-sold tariff choices.
Ofgem senior partner in charge of enforcement Sarah Harrison said, "Since 2010 Ofgem has imposed nearly £100m in fines and redress on energy companies for various rule breaches, including £39m for mis-selling, and introduced radical new reforms to make the market simpler, clearer and fairer for consumers.
"The time is right to draw a line under past supplier bad behaviour and truly rebuild trust so consumers are put at the heart of the energy market. E.ON has today taken a good step by accepting responsibility for its actions and putting proper redress in place."
E.ON UK chief executive Tony Cocker said, "We are really sorry and want to make it absolutely clear that we’re putting this right.
"It is completely unacceptable that we may have been unclear with customers about their tariff choices and as a result those customers may not have made the best choices for them. There was no organised attempt to mislead, and Ofgem has acknowledged this, but that does not excuse the fact we did not have in place enough rules, checks and oversight.
"We are completely overhauling our sales operations and have already ended face-to-face sales, outbound residential telephone cold calling, and have revised and improved controls in our telesales operations. Whilst we have already put in place a number of changes to meet our customers’ and our own expectations, we can and should always be looking to improve our controls and our service."