The energy industry watchdog is investigating claims that asylum seekers in Scotland had been misled into switching their gas and electricity suppliers.

Ofgem has been informed of the scam in and around Glasgow which is said to involve three England-based companies - London Electricity, PowerGen and Npower.

It was alleged that sales staff were taking advantage of asylum seekers, who have poor English, and offering them the false incentive of saving money.

We have always been clear on this, the agents would not be working but for the companies, they are the end beneficiaries

John Hanlan Energywatch

The victims of the scam, known as "erroneous transfers", could not understand enough English to grasp that a new contract with a new supplier may not be beneficial, and in some cases drive up bills.

Mohammed Asif, a spokesman for Glasgow's asylum seekers, said many do not understand any written English and the majority have very little spoken English.

He added: "People get panicked and at the end of the day they think there is something wrong with them or they have signed for something that they do not understand because they are scared."

London Electricity, PowerGen and Npower all said that mis-selling was unacceptable and disciplinary action could follow.

Training accredited

John Hanlan, chair of the Scottish committee of consumer group Energywatch, said responsibility for sales staff had to lie with their employers.

He said: "We have always been clear on this, the agents would not be working but for the companies.

"The companies are the end beneficiaries for what the agents are getting up to so therefore the companies have to take full responsibility for these agents."

Brian Wilson is holding a summit on mis-selling

Jenny Kirkpatrick, chief executive of the Electricity Association which represents the energy companies, said agents found to have mis-sold would be scrubbed from the association's database.

She said: "I think the industry is doing the tightening up needed, a scheme called Energy Sure has been established which means that anyone selling products through direct means have had training accredited, their learning will have been accredited and their good practice monitored.

"It's our response to providing a really sound, positive basis for ethical selling throughout the industry."

She added: "I believe these examples happened some time ago. We announced the scheme in May alongside Energy Minister Brian Wilson.

"We have completed a six month pilot and we are confident 100% of consumers will be covered by this scheme in the near future.

Industry-wide summit

"I am astonished if this practice is still going on, because we believe in ethical selling, we have set down some excellent principles in ethical selling."

The energy minister could take action if the industry is not judged.

He has organised an industry-wide summit, meeting in December, to decide how those who fail to improve should be dealt with.

The deregulation of the retail energy market five years ago led to a spate of questionable sales practices as electricity and gas companies began competing for customers.