Ofgem and the Charity Commission have both reached different conclusions following respective investigation into the controversial energy deal offered by a partnership between Age UK and E.ON.
Earlier this year, the Sun published an article accusing Age UK of profiteering from an energy deal offered in partnership with E.ON.
The special Age UK tariff was offered to customers aged over 60 and was a two year fix and given its price (around £170 more expensive than E.ON’s cheapest deal at the time of the Sun’s article’s publication), the charity was accused of overcharging thousands of pensioners to the tune of around £37 million a year.
Age UK were found to have received some £6 million from E.ON over time and the ensuing media investigation revealed that the charity had further profited by offering funeral services and insurance policies to elderly consumers. These actions were the responsibility of the commercial arm of the charity, Age UK Enterprises.
Following the Sun’s article, an official investigation was launched by Ofgem at the behest of Energy secretary Amber Rudd, while the Charity Commission simultaneously launched an investigation of their own.
From the offset, Age UK denied any wrongdoing, arguing primarily that at the time that the deal was first announced, it was competitively priced.
Despite this though, the deal was suspended temporarily while the investigations took place and is still off the table.
Now, the investigations have been completed and both Ofgem and the Charity Commission into E.ON and Age UK respectively.
The energy watchdog released a statement saying: “Ofgem has looked into E.ON’s marketing of its tariffs with Age UK and concluded that there is no case to open an investigation.”
They did add: “we have written to all suppliers reminding them that relationships with charities and other trusted organisations require appropriate oversight.”
A spokesperson for E.ON said in response: “We are clearly pleased that Ofgem has found there is no case to open an investigation regarding our relationship with Age UK Enterprises.
“We take our regulatory requirements extremely seriously and we continue to put our customers first; ensuring they have the information and tools they need to choose a tariff which best suits their needs.”
The Charity Commission, however, while stopping short of all-out criticism, said that fundamentally, Age UK has displayed a lack of the necessary oversight in endorsing the deal, and that the charity should place more focus on transparency in the future.
The Charity Commission’s chief operating officer, David Holdsworth, said: “Participation in the energy market poses significant risks, and Age UK should consider whether continued involvement is in the charity’s best interests.
“Although the charity had oversight mechanisms,” he went on, “the commission found these were insufficient and needed to be kept under more regular review. Any fee or commission that the charity receives through these arrangements must be clear and transparent.”
They said that, since the principle selling point of the tariff was never the raw cost of it but was rather to do with overall value, including the security that comes from having a fixed price for two years.
“However,” they said, “the commission is of the view that it is likely (given that the charity’s brand endorsement of the tariff would have been understood in the context of the charity’s purposes and its work in respect of fuel poverty) that this could have set an expectation amongst some that the tariff would be the cheapest available rather than the broader definition of ‘best value’.”
A spokesperson for Age UK issued a statement responding to both Ofgem and the Charity Commission, praising the content of the respective reports and promising to take on board the issues raised.
The statement read: “We are especially pleased that, with respect to the Age UK energy tariff, Ofgem has found no breach of the regulations, and that the Commission has addressed the misconceptions about pricing and has acknowledged that the tariff had regard to the particular needs of older people.
“We accept we can never be too transparent and our trading arm needs a sharper demarcation from the Age UK charity.
“We want every customer of our trading arm to know who they have bought from, that any surplus is then gifted to our charity, and how this then benefits older people in need. We will be making some changes so this is always crystal clear”
