The energy company Scottish Power is being forced to pay back close to £1 million after an independent regulator’s investigation proved that the company had been overcharging customers who refused to pay via Direct Debit.
It is not uncommon for energy companies to make customers who choose to make transactions via methods other than Direct Debit pay up slightly more. It is often done to cover admin costs. However, an Ofgem investigation into Scottish Power’s pricing has found that the amount they are charging is vastly disproportionate to the cost of dealing with these other methods. This occurred between September 2009 and December 2012. Now, they are being forced to pay back a staggering £750,000.
A senior partner in charge of enforcement at Ofgem, Sarah Harrison, said:
Suppliers need to clearly justify the different prices they set for different payment methods. In this instance, Scottish Power did not have a robust process in place when setting their prices to ensure that the difference between their tariffs complied with Ofgem’s rules. We have held them to account for this and they will now pay £750,000.
Scottish Power, who are one of the Big Six energy companies in the United Kingdom and are based out of Glasgow, have agreed to co-operate in full and pay the hefty fine. It will not go back to the customers its has over-charged though. Instead, the money will be paid to Energy Best Deal. This is a public awareness campaign created and run by Citizen’s Advice. It helps customers find the best deals on their gas and electricity.
A spokesperson for Scottish Power has said:
We recognise that historically we did not have a robust process in place but we are pleased that Ofgem has concluded its investigation and made no finding that any specific impact on customers resulted from our failure to have these processes in place. We fixed this problem by December 2012 and all of these processes are now fully compliant.
This is not the first time Ofgem have hit Scottish Power with a big fine. In October 2013, the independent energy regulator forced the company to pay back £8.5 million. This was after an investigation that found its doorstep and telephone sales team had deliberately misled customers. However, it is not the biggest fine that Ofgem have given out. That was to the rival business Eon who had to pay £12 million after it found they were engaging it “extensive poor practices” regarding their sales.