Gareth Henderson: False claims over power bills harm trust

One of my huge concerns with such a focus is the use of incorrect advertising to mislead customers. This is not a new issue, a number of the “Big Six” energy firms have been caught out and had to pay huge fines in recent years. E.ON were forced to pay £12m, SSE received a £10.5m fine and British Gas was hit with a £1m penalty.

You would think such large fines would deter others, but I believe it is still going on and particularly in a new and growing part of the sector – third party companies who claim to reduce your energy bills. We frequently see offers of free services from these businesses – but are they actually free?

I believe there is a lot of deliberate misleading going on when actually there are hidden costs and long-term commitments attached. Some even go as far as promoting the services as free on their website.

As a business owner, I strive to run my company with honesty and integrity and this filters through all employees at all levels who are committed to ensuring we are always completely reliable and 100 per cent up front and honest about costs and charges both now and in the future.

It frustrates me when the industry I work in is tarnished by lies and untrue claims that mislead the consumer into thinking they are getting a free service when they’re not.

All brokers provide a service to businesses and consumers and should adhere to a set of principles. I fully support the aims of the industry watchdog Ofgem in trying to set this up and enforce this – it is an area of the sector that definitely needs tighter regulation.

All brokers or third party intermediaries have a duty to be clear about what it is that they’re offering and never give their customers false or misleading information.

What this boils down to is about being honest from the outset – respecting them, providing good customer service, being professional. Everyone should ensure that clients are treated in a professional manner, communication is accurate and transparent and we make sure that everyone is aware of how cost comparisons are worked out and what they are expected to pay.

To ensure this happens, we have opted in to a voluntary trade association created to protect the reputation of third party intermediaries. This gives us a code of conduct which we are more than happy to support – the challenge with it being a voluntary code is that not everyone has to abide by it. It is time for that to change.

The Competition and Markets Authority recently undertook a comprehensive year-long investigation into the energy market and third party intermediaries which identified a general lack of price transparency concerning tariffs, and lack of clarity on incentives when providing advice or information to customers.

Third party intermediaries are being encouraged to be more transparent with their customers about which suppliers they partner with, and how they are paid for services, whether its commission from energy suppliers, charging a fee, or taking a percentage of energy savings made. It also needs to be clear whether customers will get the cheapest quote from partnered suppliers or whether they only get a selection of quotes.

Energy brokers have the ability to determine what levels of commission they will earn, although some suppliers do have a cap on what can be added onto commission. A client can ask a supplier to disclose what commission a broker gets, and some will provide that information, however some won’t due to confidentiality, which is why working with an open and transparent broker is so important. Unfortunately, not all brokers are always entirely honest with clients when it comes to disclosing their commission.

Being honest and transparent with clients leads to solid and trustworthy relationships. It goes without saying that if they trust your judgement they are more likely to stay with you for the long run. But trust can only go so far – it is time for the energy sector to tighten regulation to protect customers and ensure they always get the honesty and transparency they deserve.

Gareth Henderson is group managing director of Elland-based Orchard Energy.