10 October 2002 – Ofgem is proposing to levy a record £2m fine on London Electricity, the UK energy regulator said yesterday.

Ofgem took the first steps to impose the financial penalty on energy supplier London Electricity for failing to stop its sales force, and that of its affiliate company Virgin Energy, mis-selling gas and electricity to domestic customers.

The decision follows a four month investigation into how London and Virgin manage direct selling – a move triggered by an unacceptable level of customer complaints about miss-selling by the two companies and their agents. The investigation found London in clear breach of its licence conditions.

This is the first time that Ofgem has used its new powers, which came into effect in April this year, to impose financial penalties.

Ofgem Chief Executive, Callum McCarthy, said, “The record of London and Virgin Energy in the miss-selling of gas and electricity since the beginning of the year has been completely unacceptable. They are in clear breach of the rules governing direct selling.”

McCarthy is concerned that incidents if miss-selling will damage consumers confidence in switching suppliers which means that they may not be benefiting from the consumer choice which he believes is vital.

“This sends out a strong signal to any other companies performing badly in this area. The senior management of London and Virgin should have taken notice of the clear message from customer complaints. Energy suppliers must ensure that their houses are in order or face similar consequences,” said McCarthy.
London Electricity has 21 days to make representation after which the penalty may be imposed, adjusted or withdrawn.

London Electricity has dismissed a number of sub-contracted staff as a result of complaints. Vincent de Rivez, London’s chief executive said that, “I have always said that miss-selling will not be tolerated.”