Green Star Energy compensates customers for mis-selling

Small supplier Green Star Energy has paid £679,283 in compensation and payments to the consumer redress fund after mis-selling to customers and failing to provide annual statements.

Industry regulator Ofgem said the company offered tariffs to 8,815 customers when visiting a bespoke page on price comparison website Utility Discount, which was accessible only via an online advert.

Green Star confirmed to Ofgem that Utility Discount acted as a sales channel for it 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.

Some customers consequently 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.

From 25 January to 25 May this year, Green Star did not ensure that the price comparison website clearly informed prospective customers that it was acting as its representative, meaning that customers were unable to make an informed choice during this period.

Ofgem said 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.

Following the findings the supplier took action to ensure that when customers visited the bespoke page for Green Star it had been changed so that it was compliant. Green Star 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.

The provider has also agreed to pay £151,376 to the consumer redress scheme for mis-selling to customers.

In a separate issue Green Star reported itself to Ofgem after it failed to issue annual statements to some of its customers between August 2014 and November 2017.

Ofgem stipulates that suppliers must provide annual statements to customers at least once a year 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.

In response to the findings, Joanne Thornton, president and managing director of Green Star Energy, said: “We acknowledge that Ofgem has recently published the outcome of their investigations with Green Star Energy and our compliance with obligations under our supply licences.

“Our aim is to provide attractive products to energy consumers and world class customer service. As such, we have worked proactively and cooperatively with Ofgem to remedy this matter, and have further made a contribution to the Energy Savings Trust that will benefit consumers.”

The Energy Savings Trust is appointed by Ofgem as the independent service provider to manage and allocate voluntary redress funds.

Ofgem appointed Green Star Energy to take on the customers of collapsed supplier Future Energy, which ceased trading in January.

Green Star Energy is the domestic trading name of Hudson Energy. Hudson was appointed as the supplier of last resort for non-domestic provider National Gas and Power (NGP) after NGP had its supply licence revoked in July.