The owners of Direct Energy – one of North America’s largest energy and energy-related services providers with more than 5 million residential and commercial customers, has been accused of paying staff bonuses to inflate customers’ bills by up to 60 per cent.
British company Centrica is already known for playing hardball. Its boss Sam Laidlaw has long been one of the highest paid energy bosses in the UK, and unashamedly gouges the British consumer.
When the British Government regulator announced an enquiry into the running of the energy market last month, Laidlaw responded by threatening to cut investment in the UK.
Now a whistleblower has claimed that his British Gas subsidiary is paying staff bonuses to inflate customers’ bills by up to 60 per cent.
The former employee said he felt ‘disgusted’ by the policy, which encouraged staff to target charities and small businesses and sell them the most expensive deals possible.
Employees were told they could triple their £25,000 salary through commission if they sold the highest-priced tariffs to enough customers.
Churches and charities – including the Scouts – were among those targeted by the policy, the whistleblower said, with some organisations ending up £2,000 a year worse off.
Last night, energy regulator Ofgem said it would examine the evidence uncovered by the Mail and take ‘firm action’ if it found British Gas had not been ‘honest and transparent’ with its customers.
The former sales worker, who asked not to be named, said he witnessed sales agents on a ‘regular basis’ signing up churches and charities to long-term contracts at the maximum price in order to earn a higher salary.
Smaller businesses and charities tended to fall for the tactic because they had fewer resources to research the best deal, he said.
The whistleblower, who worked for British Gas between 2010 and 2013, said its policies had been engineered to ‘rip off’ customers – and he believed the practice was continuing today. His revelations come just days after the company was fined £5.6 million for blocking business customers from switching suppliers.
‘People were desperate to make the salaries they had been promised, so everyone inflated the prices,’ he said.
‘Scouts was a favourite one; churches, charities, small businesses, where people would just go for the maximum 5p notch-up,’ he added.
By switching to the most expensive deal, a company’s bill could increase by more than £2,000 a year.
‘For a small business, that kind of price increase could be enough to finish you off,’ he said.
A sales representative would normally make between £4 and £37 in commission per deal if they managed to persuade existing customers to renew contracts or add more properties to their accounts.
The former sales agent, who worked for the company from 2010 to 2013, said employees were told they could triple their £25,000 salary through commission
But if they managed to move the customer to a more expensive deal – known as ‘notching up’ – they could earn more than £400 a time.
The ex-sales agent said most employees felt guilty notching up bills, but others thrived on it – and made up to £80,000 a year.
‘Some people were quite proud about notching up the unit rates,’ he said. ‘I felt guilty. I didn’t do it that often. But there were plenty of people there who had no guilt whatsoever.
‘They were doing it for the big bucks because they were greedy.’
The former employee said the words ‘Volume to value’ were painted on the walls of the company’s call centre in Leicester to encourage staff to target customers worth more to the business – in other words paying more, or higher, bills – rather than seeking a greater number of customers.
The whistleblower’s own method of ‘cheating the system’ was to notch up customers who had empty buildings.
These customers wanted the cheapest standing charge and weren’t affected by notched-up unit rates because they used very little energy.
He said: ‘That meant I got the commission, but the customer didn’t actually pay more.
‘The company had a lot of people off with stress on the sales floor, and it was partly linked to sales targets but partly linked to what you had to do to make your money.’
The whistleblower said the former managing director of British Gas, Phil Bentley, was made aware of the practice by staff. But he suggested customers would eventually benefit from rip-off deals because their rates were fixed and energy prices would get even higher still over time.
Clients who contacted British Gas to renew contracts or add properties to their accounts were called ‘hot leads’ and passed on to the sales department.
Customers often called the company when their contracts were rolled over.
If customers failed to notice their tariff was due to expire, they would automatically be put on to a much higher rate.
This meant call centre staff were able to offer them rates a fraction lower than the rollover rate but still up to 60 per cent higher than the best deal. British Gas stopped the practice of automatic rollovers in July last year.
For selling energy to customers at the base rate, which was 8p in 2010 and rose to 13p by 2013, sales agents would earn between £4 and £37 per deal. For inflating the prices by up to a maximum of 5p per unit of energy, they earned between £93 and £403 per deal.
But customers could lose thousands.
A low user using 6,000Kw a year would have paid £480 at the base rate in 2010. With a 5p notch-up, this would increase to £780 a year.
The bill for a medium user (18,000Kw a year) would have risen from £1,440 to £2,340, and a high user using 45,000Kw a year would have been billed £5,850, instead of £3,600 at the base rate.
No action has been taken to change the commission structures.
‘Over three years I flagged it up ten times,’ he said. ‘I just gave up in the end – I didn’t get anywhere. I felt I was in a precarious position anyway. Everyone there was made to feel they should be grateful for their jobs.’
A not-for-profit tariff existed for charities, but according to the ex-sales agent this rate was ‘never’ used because staff members did not know what commission they would get and the tariff was actually worse value than the standard rate.
In October, British Gas announced it was increasing prices for domestic customers, with a dual-fuel bill going up by 9.2 per cent. The increase put the average annual household bill up by £123.
A spokesman for Ofgem said: ‘There are strict rules in place which require suppliers to take all reasonable steps to ensure information provided is complete and accurate, understandable and not misleading, and that sales activities are conducted in a fair, honest, transparent and professional manner.
‘We welcome the information the Daily Mail has given us. We would encourage anyone with information that an energy company is not complying with Ofgem rules to provide us with this.’
British Gas Business managing director Stephen Beynon, said: ‘We strongly refute any suggestion that business contracts have been negotiated inappropriately. This is a highly regulated market, and every part of the sales negotiation process is closely monitored.
‘Sales agents do receive commission, but we are reducing its importance. We’re leading the way in addressing the variability in price that customers face in this market, and we’ll continue to do so.’
He added: ‘We take very seriously any concerns raised by employees or customers, and our processes, as well as sales agents’ terms, are regularly reviewed to ensure they are fair and appropriate.’
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