Green Star Energy has paid compensation for mis-selling to 8,815 customers who were offered only Green Star Energy tariffs when visiting a bespoke page on the price comparison website Utility Discount, which was accessible only via an online advert. Green Star Energy has also paid additional money to Ofgem’s consumer redress fund after it failed to provide customers with annual statements.
After working with Ofgem, Green Star Energy confirmed that Utility Discount acted as a sales channel for Green Star Energy and customers that arrived on the website through a particular online advertisement were only offered a Green Star Energy tariff if it was cheaper than the customer’s existing tariff.
Throughout the period of 25 January to 25 May 2018, Green Star Energy did not ensure that Utility Discount clearly informed prospective customers that it was acting as its representative, meaning that customers were unable to make an informed choice during this period.
As a consequence some customers did not realise that cheaper deals were available elsewhere. Only customers who arrived via the online advertisement whose current tariff was cheaper than any Green Star Energy tariff were shown a wide view of available tariffs. The supply licence does allow suppliers to use third parties for marketing and sales. However, it must be clear to consumers when a third party website operates on behalf of a supplier, rather than offering an independent service as price comparison websites are expected to.
All suppliers are responsible for the activities of third parties acting as their representatives and must make sure that their sales activity is transparent and does not mislead consumers. As a result Green Star Energy did not comply with its supply licence to make sure customers can make informed choices when switching.
The supplier took action intended to bring itself into compliance by ensuring that when customers visited the bespoke page for the supplier, that it was changed so that it was compliant. The supplier has committed to paying £361,415 in compensation to customers acquired through Utility Discount and has allowed them to switch away without being charged exit fees. Green Star Energy has also agreed to pay £151,376 to the consumer redress scheme for mis-selling to customers.
Separately, Green Star Energy self-reported to Ofgem that it failed to issue annual statements to some of its customers between August 2014 and November 2017. Suppliers must provide annual statements to customers at least once a year in order to help them understand their energy consumption, estimated and associated costs and remind customers that they could save money by switching.
Green Star Energy has now put in place systems to issue annual statements to the majority of its customers and has set out an action plan to issue annual statements to the remainder. It has also agreed to pay a further £166,492 to the consumer redress fund in recognition of its failings and the detriment caused to customers. Consumers may be able to save hundreds of pounds by switching supplier. Ofgem is committed to making it easier for people to find the best deal for them, and to taking firm action if suppliers’ behaviour falls short in this respect.
Ofgem has now closed this compliance case without taking enforcement action, taking into account the steps Green Star Energy has since taken to address its failings, compensate customers and the redress it has agreed to pay.
Peter Earl, Head of Energy at Compare the Market, said “The failure of Green Star Energy to send annual statements over a three year period is staggeringly poor and it is likely that this had the effect of stopping people switching. The whole idea of the annual statement is to give people an overview of how much energy they’ve used and how much they’ve spent, providing them with the relevant information to shop around to help them to switch to the best deal. In not issuing annual statements, Green Star Energy left its customers in the dark. With customer service like that, it is no wonder that the majority of households don’t engage with their energy consumption and have no idea how much they spend. Hopefully, those customers impacted, will strongly consider switching to a company that at the very least provides them with annual information about their energy consumption.”