Ombudsman Services | Mar 16, 2022
This article outlines our approach to resolving disputes where an energy broker wants to represent a business customer.
There are a number of reasons why a customer should be able to appoint third parties to act on their behalf. They may not be able to represent themselves, they may prefer someone with more expertise to represent them, or they may not have the time.
Busy business owners don’t have the same protections extended to domestic customers. They have longer contracts and pricing that’s more complex to access and compare, so may choose to hire a specialist to manage their energy needs.
Regardless of the situation, suppliers need to allow customers to nominate a third party to act on their behalf. We would consider it unfair for a customer not to be allowed to appoint a third party, or for the process to be made needlessly difficult.
It’s common for a broker to present a supplier with a letter of authority detailing the customers permission to act on their behalf. We’ve been asked if suppliers are entitled to validate these letters before allowing a third party to act. We think it’s important to assess the risk, and strike the right balance between respecting customers’ wishes and protecting their accounts from potentially fraudulent activity.
For example, where you’ve worked with a particular broker for many years and their actions have always been appropriate, it might be reasonable to accept a letter of authority without further validation.
Conversely, where there isn’t an existing relationship, or where poor behaviour has previously been demonstrated, it might be reasonable to check with the customer that permission has been given. It’s also worth considering other factors, such as what the third party hopes to achieve on behalf of the customer.
Where you feel the need to validate a letter of authority, please bear in mind that the customer may have appointed the third party to avoid further contact from you! By making it quick and easy for them to confirm their permission, you can ensure that the validation process is appropriate and not an obstacle to resolving any potential dispute.
Where a customer wishes for all communication to come through their authorised third party, we believe that it’s important to respect this. That said, you are entitled to communicate with your customers and share information about their account.
For example, where a customer wants a third party to manage their energy account on their behalf but there’s been a change made. You can still update the customer while continuing to liaise with the third party. It should be straightforward to get this right in most situations.
Some suppliers have expressed concern that brokers charge customers for acting on their behalf. Our view is that this is fine, as long as the customer understands how they will be charged for the brokers’ service.
Ofgem are due to announce ADR for energy brokers later this month. As you know, we’ve been preparing to provide dispute resolution services between microbusiness customers and energy brokers for a while now. We’re set to start providing the service from the end of this year and so are conducting a number of consultations with the suppliers involved and the brokers they work with. We’ll be hosting a non-domestic discussion as part of our Sector Liaison Panel on 7th April where we’ll be asking suppliers to discuss 2 key questions about how cases should be handled once ADR for brokers is introduced:
Customers sometimes complain to their energy supplier about being mis-sold an energy supply contract by a broker. If, in those cases, we decide that the customer has been mis-sold, we might require the supplier to release the customer from their contract. We’d like to know whether, suppliers feel that it would still be appropriate to require contract cancellation. And if it is still appropriate, how should such a resolution be arranged.
If a customer wants to complain about the supplier in relation to the way in which a broker sold the contract, should we accept the complaint, or should we signpost customers to the broker? We’d like to learn how suppliers intend to approach the issue – for example, if a supplier was to receive such a complaint, would they respond to it in the way they do now, or would they signpost to the broker?
If you’re able to join this discussion please register to attend below. If you’re not able to attend but have feedback on these questions, please email partners@ombudsman-services.org