An energy tariff offered by E.ON in partnership with charity Age UK is to be suspended following claims made by the Sun newspaper implying that the charity was profiteering by forcing pensioners to pay over the odds for their utilities.
Claims made in the paper suggested that the tariff, which is more expensive than the cheapest deal offered by E.ON, was being pushed onto pensioners by Age UK, who then made large amounts of profit from commission of £41 per customer. They claim that the commercial partnership between E.ON and Age UK, which neither party denied the existence of, amounted to payments from the energy provider to the charity to the tune of around £6 million per year.
The tariff, which has a representative cost of between £948 and £1049 a year, was a two-year fixed deal that costs between £145 and £245 more than E.ON’s current cheapest deal, a one-year fix. The Age UK tariff was aimed at customers over the age of 60 and offered no exit fees and an automatic price alert, meaning that those signed up to it would automatically receive a notification with the option to switch if a cheaper deal was on offer.
According to the Sun’s calculations, with some 152,000 customers signed up to the tariff currently, this amounts to pensioners being overcharged by a total of £37 million.
Following the Sun’s article, Ofgem announced that they would be investigating the partnership between E.ON and Age UK in order to find out whether or not there had been any widespread misleading, and what action should be taken if so.
Ian Foy, who heads Age UK’s commercial arm, Age UK Trading maintained that there had been no wrongdoing, saying of the tariff, “we never claimed to be the cheapest.” The tariff was marketed largely on the basis of simplicity and the security that a fixed rate plan brings.
Now though, the pressure mounting on the energy provider and the charity has led them to temporarily suspend the tariff. Any customers currently signed up to it will not see their tariff forcibly changed, but will remain on it until they desire to switch, at which point they can do so free of charge.
E.ON and Age UK made a joint statement announcing the suspension of the offer, saying: “E.ON and Age UK Enterprises have announced that they are temporarily to stop offering an Age UK Enterprises branded tariff to new and renewing E.ON customers from Wednesday 10 February 2016. This decision has been reached on a mutual basis and both organisations retain confidence in the tariff offered to customers. However, due to continued speculation regarding the partnership, both organisations feel it is right to pause and reflect on the best way for both parties to achieve their shared goal of helping customers.”
Mr Foy added: “We always aim to give our customers outstanding value for money. This decision, prompted by the planned tariff changes, will give us the opportunity to review the current situation.”
