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Scottish Power to face probe over allegation of mis selling

Article By: ,  Financial Analyst
July 18, 2014 10:15 AM

Scottish Power is set to face an investigation following new allegations from ministers about the mis-selling of products.

The issue surrounds stores offering customers extended warranties on goods that could not be refunded if they were not used within five years. The scheme proved popular with over 600,000 people taking up the offer, 40,000 of whom were in the Glasgow area alone. However, once the shops were sold to a firm that would later go out of business it left many customers in the dark over their current policy.

In 2004, Scottish Power was forced to pay £6 million to settle the claims brought forward by disgruntled customers. The Department for Business is now looking to investigate new information on £79 million of outstanding cashback promises made to Scottish Power customers over a decade ago.

Labour MP Gerry Sutcliffe has been one of the main voices behind launching a new investigation into the scheme. He has previously backed a parliamentary Early Day Motion to raise the issue at Westminster which gained support from prime minister David Cameron. Mr Cameron stated that the government would work to "get to the bottom" of the issue.

Mr Sutcliffe told the BBC: "My colleagues and I had a very positive meeting with the consumers affairs minister today. We welcome the fact that the department is treating this issue with the seriousness it warrants."

Scottish Power stated that it would be working alongside investigators on any enquiries into its operations but maintained that the PowerPlan warranty scheme "did not involve any wrongdoing" on its part. It added that it will assist the Insolvency Service with any queries it may have about the company's operations.

The company's share price has been falling steadily since the turn of the year but achieved a slight bump as it grew 0.16 per cent to 115.40p on Friday, July 18th at 08:58 BST.

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