Ofgem, the energy regulator, has launched an investigation into one of Britain’s biggest power companies after a Sunday Times investigation revealed its salesmen were lying to householders to get them to switch suppliers.

Scottish Hydro Electric suspended two of its salesmen and has announced a review of the way agents are paid following last week’s revelations.

An undercover reporter, working as a trainee salesman, recorded sales staff deceiving customers while boasting about large commissions.

The reporter, who spent three weeks training and then shadowing experienced staff, witnessed reps making up prices on the doorstep; pretending to be officials from the “Gas Board”; exploiting pensioners, and asking people to sign documents without revealing they were a contract.

One sales representative boasted of having lied to a recently bereaved widow that she would receive free electricity insurance cover, when it cost an extra £4 a month.

Describing his sales technique, the rep said: “It’s not lying, it’s a fabrication of the truth. I went through it all at the door and I actually had to stand and think, how much of that is actually bollocks. I mean, there was a wee bit of f****** truth in there.”

Ofgem launched an investigation following a recommendation by Energywatch, the consumer watchdog.

Audrey Gallacher, head of company performance for Energywatch, said she was “deeply disappointed” that Scottish Hydro Electric did not appear to have cleaned up its act despite complaints about its parent company, Perth-based Scottish and Southern Energy (SSE).

“Some of SSE’s sales agents appear to have continued to flout the rules and mislead consumers,” she said.

“We will be meeting with the company again to discuss this new evidence of their agents allegedly gaining access to consumers with false credentials, exerting pressure and making misleading claims in order to sign them up as new customers.

“Ofgem’s response is critical and should send a strong signal to any other companies thinking about breaching the ERA (European Rating Agency) sales code of conduct.”

An Ofgem spokesman said: “We are grateful to The Sunday Times for sharing their information on the activities of doorstep sales staff from Scottish Hydro and will carefully consider this material.”

Ofgem can fine energy companies up to 10% of annual turnover and suspend their sales licence. Last year SSE, which has 8.8m customers, posted pre-tax profits of £1.2 billion.

Christine Graham, a nationalist MSP, called for tighter regulation of energy firms.

“These bullying sales tactics are most likely going to impact on the most vulnerable people in our communities and this case demonstrates once again the apparent rogue nature in which energy companies are operating in the UK,” she said.

“The sector simply cannot be trusted to operate fairly and in the best interests of consumers without stringent regulation.”

Gavin Brown, the Scottish Conservative energy spokesman, described the evidence of misselling as “deeply worrying”, adding that it was vital to establish how widespread it was in the industry.

“If there is a wider issue then there clearly needs to be far better training, far better supervision of what is going on and steps to educate the public about potential risks,” he said.

Michael McMahon, the Labour MSP, said he was concerned that Scottish Hydro Electric’s commission payment system was encouraging pressure selling. Under the company’s rewards structure, sales agents who do not sign up 20 new customers per week earn nothing apart from their weekly basic salary of £150.

“By their remuneration structure, they are forcing people to cut corners,” he said. “It comes down to the individual integrity of the sales person but the company has a responsibility not to pressurise people into making those types of decisions.”

Last night, SSE said it would review its payment system as part of its investigation.

“We take extremely seriously any allegations of inappropriate sales techniques and at the start of this week we suspended two sales agents pending the outcome of a full inquiry into their activities,” said Alistair Phillips-Davies, SSE’s energy supply director. “It is well known that we will not tolerate misselling of any kind and anyone who is found to be operating in this way will receive full disciplinary action.

“We are re-doubling our effort to ensure there is full compliance with the letter and the spirit of our sales training and the code of practice.”

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