The charity Age UK has been criticised and told to make significant changes by the Charity Commission after an investigation into its controversial relationship with energy supplier E.ON.
In February this year the Sun claimed OAPs were being overcharged when they signed up to a special E.On/Age UK gas and electricity tariff marketed to older customers. The tariff was in fact more expensive than other E.On tariffs available. The paper claimed that some 150,000 customers had overpaid by about £240 a year, while the charity earned a £6m commission from the partnership.The tariff was withdrawn on 10 February 2016 and energy secretary Amber Rudd asked Ofgem to investigate the deal.
Today Ofgem announced its conclusion that there is no case to open an investigation. In an open letter, senior partner for consumers and competition Rachel Fletcher said: “These events provide a timely reminder for all suppliers of their obligations to oversee the sales and marketing activities of any third parties they partner with and to ensure they treat consumers fairly. This includes not marketing products or services to consumers for whom they would be inappropriate.”
The partnership was set up between E.On and Age UK’s wholly owned trading subsidiary, Age UK Enterprises Limited. Age UK Enterprises Ltd has had a commercial partnership with E.On since September 1999 and signed a new 10 year agreement in January 2011.
The Charity Commission today published a report on the partnership in which it advised Age UK that: “The charity should more clearly distinguish between advising beneficiaries on ‘money matters’ and engaging in commercial fundraising activity.”
In particular, it said: “Participation in the energy market poses significant risks to a charity, because of the volatility and competition in the market and the tariff structure, which may be confusing to customers. What might be the best price when a tariff is first launched may quickly become less competitive if energy prices change during the life of the offer. Also the value added benefits of a particular offer to older people, the charity’s beneficiaries, (such as no exit fees) may not necessarily be understood by customers in price comparisons.”
Read Ofgem’s open letter on supplier arrangements with third parties and The Charity Commission’s Age UK: case report