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'No case to open inquiry' over E.ON-Age UK partnership

Published 19/04/2016

The partnership between the energy giant and the charity caused controversy
The partnership between the energy giant and the charity caused controversy

Ofgem has decided there is "no case to open an investigation" into a controversial partnership between the energy supplier E.ON and the charity Age UK.

Age UK was criticised for exploiting its position as a trusted charity after it was claimed E.ON paid it £6 million a year in return for the charity pushing expensive tariffs on to the elderly.

The energy watchdog said in a statement: "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.

"We have written to all suppliers reminding them that relationships with charities and other trusted organisations require appropriate oversight."

However, a report released today by the Charity Commission found that it was not clear that Age UK "sufficiently considered the risks of targeting beneficiaries with a commercial product in an area where the charity also campaigns on behalf of its beneficiaries".

The commission found that the nature of the commercial partnerships, and the fee or commission received by the charity, was not made clear to customers.

It recommended that Age UK "clearly identifies any commission or fee received by the charity on all Age UK branded products".

Charity Commission 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, 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.

"The commission is pleased that the charity has already taken some steps to address our concerns and we have made a number of further recommendations.

"The support offered by Age UK is invaluable to many."

E.ON and Age UK suspended the deal in February, citing "continued speculation regarding the partnership".

The move came after The Sun newspaper revealed it found details of E.ON payments to the charity contained within Age UK's annual accounts.

It is claimed the charity had been recommending a special E.ON tariff in leaflets and booklets, stating it was "great value" and "helps save energy and money".

The charity has been paid at least £6 million every year, receiving around £41 for every person that signed up, it was reported.

It was claimed that the tariff, on average, costs pensioners £245 more than they would pay on E.ON's cheapest deal.

E.ON has confirmed there was a "commercial relationship" between it and the charity but the supplier said its tariffs were competitively priced, and Age UK has rejected any allegations of wrongdoing.

An Age UK spokeswoman said: " We welcome the Charity Commission's report about Age UK's trading activities and Ofgem's report also published today.

"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."

She added: "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.

"We are glad that the benefits commercial partnerships can bring to charities and those they support have been recognised by the Charity Commission and we hope the changes we will be making in response to this report will help other charities too."

E.ON said it was " clearly pleased" at Ofgem's decision.

"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 company said.

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