Npower to pay £3.5 million to benefit vulnerable consumers following our investigation
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- Supply and Retail Market
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Npower has agreed to pay a £3.5 million package to help vulnerable consumers following our investigation which found it had breached marketing licence conditions.
Our investigation centred on the sales processes and information used by npower when customers were making decisions about whether to switch supplies to them.
The decision reflects the fact that while the company was making changes to improve its sales processes, weaknesses remained which affected consumers’ ability to compare supplier offers fairly. Npower’s sales processes therefore fell short of our tougher 2009 marketing rules.
Npower accepts our findings and we welcome their agreement to pay a £3.5 million package which will directly benefit vulnerable consumers.
The shortcomings in npower’s processes have been fully remedied and all breaches ceased by September 2012.
Summary of breaches
The licence breaches relate to:
- npower gaining insufficient information about a customer’s consumption to enable them to make informed decisions on whether to switch energy suppliers.
- npower’s processes failed to ensure that price comparisons between the price of npower’s supply and that of the customer’s current supplier were always based on the tariff that customers were on.
- Information on when some consumers would receive their direct debit discount and how direct debit levels would be reviewed was also found to have been inaccurate.
This is important information required when companies are giving comparative sales quotes to help customers make fully informed decisions.
Details of the package
Npower will make a payment of at least £25 to each of its current customers who are core group Warm Home Discount payment recipients.
Current customers will receive a credit on their account or payment to top up a prepayment meter account.
Any money which is not paid out from the £3.5m fund, whether due to uncashed Warm Home Discount cheques or any other reasons, will be paid into the npower Health Through Warmth Crisis Fund. The fund provides financial help and support for vulnerable homeowners with long term cold related illnesses who need heating repairs and installations that they cannot afford themselves.
Beneficiaries do not have to be npower customers to benefit from the scheme.
We will continue to hold companies to account to ensure rules to protect energy consumers are met and that the market works for consumers in a simpler, clearer and fairer way.
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