From Herald, 4/4/13
Scottish and Southern Electricity has been charged £10m by Ofgem for mis-selling its gas and electricity. Apparently, its telephone sales people were bamboozling potential customers by giving them “misleading and inaccurate” information about prices. They also reported that the Pope is believed to be Catholic.
I'm sure action will be swift. Two years ago Ofgem castigated the energy companies for having 300 different tariffs. This year they have 900. Last month Ofgem reported that the energy utilities were raking in record profits of £110 per household, because wholesale energy costs were falling. So the energy companies announced that they were going to put their prices up even higher.
This is called regulation? Only in the same way that sub-prime mortgages were regulated. Ofgem insists that it is not in the business of setting prices – heaven forfend. Its job is to ensure a competitive market. Well if this is competition, I'd hate to see what a cartel would look like.
Perhaps Ofgem might get better results if it tried penalising the wrongdoers just a little more severely. Tapping them on the wrist and saying “naughty naughty” tends not to work in our high powered global business environment. £10m is about 0.003% of SSE's annual revenues which last year were over £30 billion. Do you think that this penalty is going to make them change their ways? SSE has form here and were found guilty of doorstep mis-selling in 2012 and fined £1.25m. Gosh, that must've hurt.
Our largely foreign-owned energy companies put their prices up in lock step, fiddle with tariffs to make it look as if there is some kind of difference between them and then hire armies of telephone sales people to tell lies to customers. Lies? Yes – giving wrong information about rivals' prices and telling people you are putting their tariff down when you are putting it up is lying. At least it is in my book. And that's what SSE has been charged with and, to give SSE its due, has admitted. Jolly decent of them.
Scottish and Southern Electricity is of course a Scottish company registered in Perth, which makes this all the more shocking for those naïve enough to think that it makes any difference which country you screw your brass plate onto. It used to be the old North of Scotland Hydro Electricity board, set up by Tom Johnston, Scotland's greatest Secretary of State, in 1943. The Hydro was merged with the South of Scotland Electricity Board and privatised into SSE back at the end of the last century.
Aren't you glad that we don't have those terrible old nationalised industries any more? Remember how inefficient they were? My goodness, they only had a single tariff in those days and they didn't employ any telephone sales people. They are now a dynamic and competitive private enterprise company cheating their customers.
Scottish and Southern also claims to be the greenest energy company in the UK, which just goes to show that there is nothing inherently decent and honest about either being a Scottish company or being environmentally aware. SSE is the UK's largest generator of renewable energy and is one of Alex Salmond's favourites for that reason. It is one of the inner circle of favoured Scottish businesses turning Scotland in to a green energy hub. Unfortunately, it thinks its customers are pretty green too
And what of those responsible for this blatant mis-selling? Ian Marchant, the outgoing chief executive of SSE was paid £1m last year and will leave this summer with a £9m pension pot and shares worth £3.5. That's not bad. I'm sure the pensioners freezing in their homes this Spring think he's worth every penny.
But lets us also tip our hats to Lord Smith of Kelvin, who is the chairman of SSE. He is Chancellor of the University of the West of Scotland, Chairman of the Board of Trustees of the National Museums of Scotland and a former Governor of the BBC. Lord Smith is one of that elite group who are invited to sit on each other's boards and get given honours for doing so. Their only function appears to be to lend an air of respectability to the company's activities. But responsibility?
There have been calls for those at the top of SSE to resign, but it wouldn't enter his head to do so because only little people do that. Like dodgy landlords or benefit fiddlers.
Amusingly, Lord Smith was a board member of the Financial Services Authority back in the days when it was supposed to police mis-selling scandals in the banks. He is also on the organising committee of the 2014 Commonwealth Games. And he is going to be chair of the UK government backed Green Investment Bank which will be based in Scotland. Doesn't it make you proud that these bodies are in such good hands/
As we know, it was banks like HBOS and RBS that invented mis-selling when they started cheating their customers selling dodgy endowment mortgages and other fiddles. They were even found guilty of rigging Libor – the key interest rate on which many trillions of investments are calculated. Clearly, the habits that have been developed in our financial services sector are now being adopted across what is left of the energy industry.
The very word, “mis-selling” was invented for the banks and the power companies. There is of course no such thing as mis-selling. It is a euphemism, essentially, for fraud: knowingly misleading customers for the purposes of extracting money from them. Only the grand figures who run companies like HBOS cannot be accused of fraud because they are terribly important people who sit on lots of boards, so a new word had to be invented to immunise them from public obloquy.
Libor has been described as one of the biggest market frauds in the history of banking. SSE has been caught red handed. We know who dunnit; but none will be prosecuted. Royal Bank of Scotland, one of the worst offenders had to be rescued by the injection of tens of billions of pounds of public money. Their expensive advertising campaigns (largely paid for by you and me since this bank is state owned) tell us that they are “with us all the way”. If so, God help us.