CORRECTED TRANSCRIPT of ORAL EVIDENCE to Be Published As HC 1060-Ii
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CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1060-ii HOUSE OF COMMONS ORAL EVIDENCE TAKEN BEFORE THE ENERGY AND CLIMATE CHANGE COMMITTEE ENERGY PRICES, PROFITS AND POVERTY TUESDAY 16 APRIL 2013 TONY COCKER, JULIET DAVENPORT, JIM POOLE and ALISTAIR PHILLIPS-DAVIES PAUL MASSARA, IAN PETERS, NEIL CLITHEROE and STEPHEN FITZPATRICK Evidence heard in Public Questions 85 - 294 USE OF THE TRANSCRIPT 1. This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others. 2. The transcript is an approved formal record of these proceedings. It will be printed in due course. 1 Oral Evidence Taken before the Energy and Climate Change Committee on Tuesday 16 April 2013 Members present: Mr Tim Yeo (Chair) Dan Byles Barry Gardiner Ian Lavery Dr Phillip Lee Mr Peter Lilley Christopher Pincher John Robertson Sir Robert Smith Dr Alan Whitehead ________________ Examination of Witnesses Witnesses: Tony Cocker, Chief Executive Officer, E.ON, Juliet Davenport, Chief Executive Officer and Founder, Good Energy, Jim Poole, Director of B2C, EDF Energy, and Alistair Phillips-Davies, Deputy Chief Executive, SSE, gave evidence. Q85 Chair: Good morning and welcome to the Committee. There is, as you know, a lot of interest in this inquiry. We are televised today, so could you please identify yourself by name, starting with you, Tony Cocker. Tony Cocker: Tony Cocker, CEO of E.ON UK. Juliet Davenport: Juliet Davenport, CEO of Good Energy. Jim Poole: Jim Poole, Director of EDF Energy’s retail supply business. Alistair Phillips-Davies: Alistair Phillips-Davies, Deputy CEO of SSE. Q86 Chair: Mr Phillips-Davies, can I start with you? Can you tell us exactly when SSE stopped mis-selling? Alistair Phillips-Davies: I would like to start in terms of the mis-selling announcement that Ofgem made. Personally and on behalf of the management team, individually and collectively, I would like to apologise for the issues that we faced, the fact that the standards that we showed during the period that Ofgem investigated us were not the standards we would have liked to have lived up to and were clearly not what customers would have expected. But in answer to your question specifically, we cleared all the items in relation to the Ofgem investigation principally during 2011, and then there were some minor clear-ups as well that took until September 2012. Q87 Chair: It is the case, is it not, that your staff and agents continued mis-selling up to and after the point at which the Trading Standards Authority started to investigate? Alistair Phillips-Davies: The Trading Standards Authority? Chair: Surrey County Council. Alistair Phillips-Davies: Are we talking about the Ofgem investigation or Surrey County Council? 2 Chair: Surrey County Council. Alistair Phillips-Davies: In respect of the Surrey County Council investigation, which related specifically to scripts in 2009, all of those issues related to that were dealt with immediately after the judgment. Q88 Chair: But you were happy for your staff to continue using dishonest selling methods and would have continued presumably doing so indefinitely for the benefit of your profits had Surrey Trading Standards Service not started their investigation? Alistair Phillips-Davies: No, I do not think that is the case. Q89 Chair: What action did you take to stop this process prior to the investigation by Surrey Trading Standards Service? Alistair Phillips-Davies: In respect to the matter with Surrey Trading Standards, there was essentially one script where there was a detailed discussion between us and them around whether that script was appropriate. When it was ultimately decided that there were inappropriate elements within that script, we changed that script. Q90 Chair: Illegal elements, not “inappropriate”; illegal and misleading. Alistair Phillips-Davies: We have apologised to our customers for what happened in regard of that. We have obviously been fined in regard of that, and we have put that matter right. Q91 Chair: You will create a better impression with this Committee and your customers if you do not use weasel words like “inappropriate” for illegal and misleading sales scripts, will you not? Alistair Phillips-Davies: If you say so, yes. Q92 Chair: It is not, if I say so, that is what the vast majority of people who have been in touch with this Committee have already told us. We have had the benefit of a lot of contributions from the public today about the questions we should ask you, and, not surprisingly, this is one of them. Will you just be absolutely clear that SSE continued the use of illegal and misleading sales scripts up to and after the point at which the investigation by Surrey Trading Standards Service commenced? Alistair Phillips-Davies: After the investigation commenced? Chair: Yes. Alistair Phillips-Davies: So, prior to the judgment? Chair: Yes. Alistair Phillips-Davies: There were a number of changes made to the scripts at the time that the investigation commenced, and then there were further changes put in place after the judgment was issued and there was a clear ruling on what had happened. Q93 Chair: Prior to the commencement of the Surrey Trading Standards Service investigation, your company took no action to stop the use of illegal and misleading sales scripts, yes or no? Alistair Phillips-Davies: Can you repeat the question, please? Chair: Yes. Prior to the commencement of the investigation by Surrey Trading Standards Service, your company took no action whatever to stop the use of illegal and misleading sales scripts by your staff? Alistair Phillips-Davies: No, I have to disagree with that. 3 Q94 Chair: What action did they take and when? Alistair Phillips-Davies: As a company, we have always sought to hold the highest standards in respect of dealing with our customers. Q95 Chair: What action did you take to stop the use of illegal sales scripts and when? Alistair Phillips-Davies: We have a compliance function within the company and that compliance function would audit what was going on. We would review scripts and other materials that we used for sales to try to ensure that that complied with all relevant legislation, whether regulatory or legal. That is an ongoing process that we have had for a number of years and since we have been in the business of energy sales. Q96 Chair: How many of your customers were mis-sold tariffs? Alistair Phillips-Davies: In the Ofgem report that was issued two weeks ago, they estimated in the region of 23,000 people would have been disadvantaged by some of the sales practices that went on during the period of their investigation. Q97 Chair: Is it the case that these mis-sold tariffs started from 30 September 2008? Alistair Phillips-Davies: The Ofgem investigation did not cover the period that early. It covered the period from 2009; I think October 2009, from memory. Q98 Chair: We have been contacted by Surrey Trading Standards Service to point out that this illegal and misleading sales script was used from 30 September 2008. Do you dispute that fact? Alistair Phillips-Davies: No, and we have a sales guarantee in place. If there is any customer who feels they have been mis-sold to, we have had in place for 17 months a guarantee that offers any customer who thinks that they have been mis-sold to the opportunity to come to us. We were the first and remain the only company that has sought to recompense customers fully for any disadvantage that they have received as a result of any mis-selling. Q99 Chair: You will compensate people who were mis-sold from the beginning of October 2008? Alistair Phillips-Davies: Yes. If there was anybody who was mis-sold to who could prove that to us and wants to contact us, we would consider that case and we would compensate them for it. Q100 Chair: So the onus is on the offended party rather than you as the guilty party? Alistair Phillips-Davies: We have placed adverts in national papers and we have written out to approximately 10% of our customer base or those people who may have been affected by these practices in an attempt to try to make sure that they all come forward and we can have a proper conversation with them about what compensation they are due. We have been doing that for the last 17 months. We have done it in conjunction with a well-known or leading consumer body and we estimate, in conjunction with Ofgem, that probably less than half of 1% of our customers would have been affected by this. Q101 Chair: What date do the advertisements suggest you will pay the compensation from? Alistair Phillips-Davies: I would have to go back and look at the advertisements, but if there is any customer who feels that they have been disadvantaged by the mis-selling practices from October 2008, we would happily recompense them. 4 Q102 Chair: It was suggested to us that the compensation offer was only going to apply to customers from October 2009, but I am happy to note your on-the-record commitment to using the earlier date. Alistair Phillips-Davies: We will seek to rectify that, and we will also talk with the consumer body we have been working with about how we communicate with any people who have not been made aware of that. Q103 John Robertson: I was interested in your advert, of which I have a copy here.