Ofgem can soon force energy firms to compensate victims of mis-selling

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New powers will be handed to Ofgem in order to force energy giants to compensate any customers who have fallen foul to miss-selling.

The UK energy regulator will be granted the extra powers to compensate consumers duped by rogue selling as well as fining any power supplier found guilty of such illicit practices.

At present Ofgem has its hands tied in some aspects; the regulator can fine energy companies found guilty of breaching their licence conditions by as much as ten per cent of their turnover, however any money generated from fines simply goes straight to the Treasury, not the consumers involved - unless the firms elects to compensate its customers directly.

The news comes around a month after 'Big Six' energy firm SSE was hit with a staggering £10.5m fine by Ofgem for a 'prolonged and extensive' period of mis-selling.

SSE has offered to pay £1.5m to customers following the scandal, but with 11,000 people lodging claims for compensation, each victim would receive as little as £65 on average.

In a similar incident last year, EDF has fined £4.5m as a result of certain doorstep salespeople being found guilty of exaggerating financial savings available to consumers. As a result EDF agreed to pay £3.5m to 70,000 'vulnerable' customers.

Consumer Futures policy director, Adam Scorer, said: "It's a victory for the consumer. Mis-selling has been a stain on the energy market since the introduction of competition.

"While the situation has got better, the recent history casts a long shadow. We fully supports Ofgem getting greater powers to benefit customers rather than the Exchequer when issuing fines."

Ofgem had previously released a document following the incident involving EDF discussing the issue of consumer compensation in which it stated:  "Ofgem does not have the power to compel companies who are found in breach of their licence conditions to provide redress, including compensation to customers but it is seeking such powers from government.

"If granted, these powers would strengthen Ofgem's ability to take more targeted action against companies who have breached their licences, including directing funds to customers where appropriate."

SSE is just one of the UK energy providers involved in the government's Green Deal scheme. Through the Green Deal energy consumers can seek a loan, which they pay back as part of their energy bills, on a range of items designed to improve the energy efficiency of their home, including wall insulation, boilers and even the fitting of solar panels.

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