It hasn’t been too long since Scottish Power was the subject of an inquiry into their energy prices — the results of which determined that the company was overcharging customers who chose to pay via Direct Debit. However, the worst isn’t over for the Glasgow based energy provider which makes up one of the United Kingdom’s Big Six. Scottish Power is facing even more pressure from legal bodies and politicians as they look into its repayments.
Scottish Power has a five-year Power Plan that provides warranties on electrical goods such as fridges and washing machines. The energy provider promises customers that they can claim back the full cost of the warranty if they have not made a claim on it within five years. However, 625,000 customers have not been paid the money promised to them which in total amounts to £79 million.
The money has been owed for over a decade. Liquidators have been chasing it for almost as long, but have hit several snags along the way. Two companies involved went bust in this time and could not assist them. Originally, they accepted a settlement of £6 million from Scottish Power for their part in the scheme. But fresh evidence appears to suggest that this is only a fraction of the sum they really owed in this money-back guarantee.
The fresh evidence acquired by liquidators allegedly shows that Scottish Power was the driving force behind the scheme. They also suggest that Scottish Power benefited by tens of millions of pounds at the expense of their own customers when it eventually fell apart. It has caused nine MPs, including the consumer minister of the Labour Party Gerry Sutcliffe, to write to the business secretary Vince Cable and demand that a full inquiry be launched into what happened a decade ago.
Meanwhile, liquidators have sent their findings to the Financial Conduct Authority as well as various criminal authorities. They claim that there may have been fraudulent misrepresentations prior to the company’s settlement in 2004.
Liquidators from the MacDonald partnership said:
“When Scottish Power realised the cost of making cash-back payments was spiraling out of control, it deliberately evaded its liability. As a result, it avoided the need to issue a profits warning, and consumers lost out.”
Scottish Power released a statement to defend their scheme. It said:
“We emphasise that the PowerPlan extended warranty scheme, which was one of a number of very similar extended warranty products offered by retailers across the industry, did not involved any wrongdoing by Scottish Power.”