Energy body calls for code of ethics

30 November 2005
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30 November 2005 | Anusha Bradley

Energy consultants should be governed by a code of ethics to ensure they promote the best deals for their customers, according to Energywatch.

The call from the gas and electricity watchdog would also end the current system whereby some agents receive payments from suppliers.

Published this month, Energy Advice for Business Consumers warns purchasers to beware of consultants offering "free" services and provides tips on how to avoid contract traps.

The idea has received backing from CIPS and the Federation of Small Businesses. Chris Lewis, energy consultant and CIPS energy committee member, said this was a prolific problem.

"Many consultants receive payments from suppliers, and some charge their clients directly as well," he said.

"Payment by commission tempts some consultants to choose the supplier that allows it the highest commission. Buyers need to be aware of this."

He added the issue was raised with power regulator Ofgem during a meeting this month, where they discussed the possible legal implications of consultants taking commission without notifying clients.

Paul Savage, business services manager at Energywatch, said buyers in smaller businesses were at risk because they did not have sufficient resources to follow energy markets thoroughly.

He stressed that the regulation should come from the energy sector itself. He added that suppliers also had a role to play "because they are able to influence, to decide where they take business from."

Between 60 and 80 per cent of energy consumed by business is bought through third parties, Energywatch said.

SM asked a range of suppliers and consultants for their views.

Suppliers said:

"It is the customer's responsibility to understand the terms and conditions that they commit to."

"Some thought is needed as to how a code would be policed."

"Customers should ask the broker questions at the outset of any negotiations regarding commission inherent in the contract."

"It's not very transparent but it's up to the customer to have a clear relationship with their broker."

Consultants said:

"The majority do not act ethically."

"If you took out the consultants that take a fee from third parties, you wouldn't have many left."

"Buyers know consultants are doing this, but don't want to know, because they don't pay it directly or have to justify it to their boss."

"Commission can be more than 15 per cent. While there is nothing legally wrong, consumers should be aware of it."

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