E.ON slapped with £7.75 million fine over customer overcharging

Energy supplier E.ON has received a massive £7.75m fine from Ofgem after incorrectly charging exit fees and/or overcharging customers following price rises, the energy market watchdog has been able to reveal recently.

The fine comes as an extra to the approximately £400,000 E.ON has already paid back to potentially affected customers.

Under Ofgem rules, suppliers have to give customers 30 days’ notice of a price rise; this allows customers a chance to switch before the increase takes effect. If a customer signals their intention to move supplier within the 30 days, they do not incur exit fees or the higher charge even if the switch occurs after the price rise. These arrangements give important protection to those customers who choose to switch in order to avoid a price rise.

E.ON was found to have made billing errors in respect of price rises in January 2013 and January 2014. These affected direct debit and standard credit customers. The average amount paid back was around £8 and £12 respectively. E.ON has made refunds to around 40,000 customers; however the number of customers actually affected by the issue is likely to be significantly less.

Sarah Harrison, senior partner in charge of enforcement said: “Ofgem’s rules give customers a chance to avoid exit fees and higher costs when suppliers put up prices. These are important customer protections and it is vital that suppliers play by the rules so customers are encouraged to engage in the market.

“E.ON’s errors meant customers who took the chance to switch were wrongly charged. It is important that E.ON has repaid potentially affected customers and cooperated with the investigation. However it’s absolutely unacceptable that E.ON failed to provide these vital customer protections yet again and this persistent failure is the reason for the high penalty.”

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