Npower Fined £26m For Treating Customers Badly

Npower has been fined £26m for failing to treat customers fairly over billing issues and complaint-handling.

More than 500,000 customers were affected by the company's billing issues between September 2013 and December last year.

Npower received more than two million complaints during that period - many regarding the billing issues - and Ofgem says these were not handled properly or promptly.

The worst-affected customers will be compensated as part of the £26m and, although it is not clear how these people will be chosen, Npower will contact them directly.

The rest of the money will go to charity. The record total sum is more than doubled the £12m levied against rival supplier E.On in July 2014 for mis-selling energy.

Dermot Nolan, Ofgem chief executive, said: "Npower failed its customers. Not only have its billing and complaint handling procedures been chaotic, it treated many of its customers poorly, which is completely unacceptable.

"Npower's management failed to act quickly enough to protect its customers when things went wrong with changes to its IT (Other OTC: ITGL - news) system."

Archna Luthra, energy expert at MoneySavingExpert.com, said the fine should send a "loud warning bell" to other providers to shape up.

She (Munich: SOQ.MU - news) said: "The energy industry seriously lags behind others on customer service and there should be zero tolerance for behaviour like this."

The fine is the latest in a litany of financial penalties for npower and the wider energy industry in recent years.

In 2014, npower was fined £1.1m for misreporting data under its environmental obigations and also handed a separate £3.5m charge for mis-selling. In 2012, there was a £2m fine for complaints handling - one of the issues covered by the latest findings.

Daniel Cooke, 35, is one of Npower's customers and has battled them over inaccurate bills since March last year. His electricity account was deleted, extra units added to one of his bills, some bills not sent and some arriving unexpectedly.

About a week ago, he noticed online that his account had been refunded every payment - a total of £468 - with no explanation from Npower.

Mr Cooke, who lives with his partner and young daughter in Taunton, said told Sky News that the £26m fine was not enough, adding: "Considering what they announced in profits last year, it's loose change."

When asked if dealing with the company had been stressful he said: "Stressful doesn't even begin to cover it.

"I would have to contact them at least twice a month and we would sometimes have demands end up on our doorstep even though we had paid our bill."

Andrew Smaje's partner Morgan Sproxton, 38, was also an Npower customer and her problems began in February 2013.

She was billed for an extra meter, didn't receive bills - even when she requested them, was overcharged hundreds of pounds and eventually chased by a debt collection agency while the bill was being disputed.

Mr Smaje, 45, who lives in Shipley, West Yorkshire, told Sky News the fine was "thoroughly deserved", adding: "What's shocking is that our experience has clearly been shared by thousands of others."

:: Q&A: Record Fine Handed Down To Npower

Many of Npower's problems began after it introduced a new IT system four years ago.

A number of bills issued during the period between September 2013 and December last year were inaccurate, with little or no detail on how the totals had been calculated.

When dealing with the complaints that resulted, Npower failed to do this in good time and chased up debts that were disputed, causing "distress and worry for many", Ofgem said.

Npower also recorded a significant number of complaints incorrectly, leading to unresolved complaints being logged as being resolved.

There were multiple records created for one problem, something it blamed on IT problems.

Simon Stacey, Npower's managing director for domestic markets, said: "We are very sorry about what has happened and that is why we have agreed this significant package of customer redress. We’ve reduced complaints by nearly 70% since the beginning of this year."

Npower's long-running IT problems have seen it lose 200,000 customers this year. The company, owned by Germany's RWE (Xetra: 703712 - news) , recorded a £48m loss for the first nine months of the year.

RWE, the German company that owns Npower, said in November that its losses had reached £111m in the first nine months of the year, compared with an £81m loss during the same period last year.

Npower boss Paul Massara left in the summer after "unexpectedly negative" half-year figures. He was replaced by chief operating officer Paul Coffey.