ERA response to alleged breach of EnergySure Code, 7 April 2008

Duncan Sedgwick, chief executive of the Energy Retail Association and chairman of the AES Board:

“We take all allegations of breach of the EnergySure Code seriously and the EnergySure Code Manager is conducting an investigation.  We are informed that npower has taken the appropriate action as specified in the Code by immediately suspending those involved in alleged mis-selling.

In order for the EnergySure Code to be upheld it is important that our investigation considers all the information available about this incident. Therefore, we shall be requesting evidence from the Sunday Times and a detailed report from npower.

There are a range of escalating sanctions available to the Code Manager which includes, in extreme cases, suspension of sales activity and expulsion of the energy supplier from the Code. Prior to this there can be written warnings, internal admonishment and external admonishment.”

- Ends -

Notes to editors:

The Code of Practice for Face-to-Face Marketing of Energy Supply (known as the EnergySure Code)was launched in May 2003 and benefits residential consumers by providing added protection to that already enshrined in law, detailing clear standards which energy Sales Agents must follow. The EnergySure Code sets out standards for the recruitment, training and assessment of every sales agent.

The EnergySure Code is sponsored by the Association of Energy Suppliers (“AES”) and is committed to the promotion of best practice in energy selling. Since September 2003 the AES has been under the control of the ERA.

How energy suppliers are accredited

Integral to the Code is the EnergySure Accreditation Scheme which all Member companies must operate which covers the rigorous selection, training and assessment of Sales Agents. The Code includes a requirement for compensation to be offered when there is evidence that a Sales Agent has fraudulently completed a consumer contract.

How the Code is enforced

Governance of the Code is undertaken through the AES. The rules of the AES require Code Members to comply with the Code and to be subject to the disciplinary procedures set out in the Code. The Association has appointed a Code Manager to carry out the supervision, administration and day-to-day operation of the Code. The Code Manager acts independently of all Members in operating the Code, putting into place monitoring procedures regarding Member performance, ensuring corrective action where agreed performance standards are not met and setting sanctions consistent with the Code. In addition an annual audit of individual Member’s compliance with the Code is carried out by the Code Auditor an independent body appointed by AES who is a firm of registered auditors, currently KPMG.

There have been a number of breach incidents since 2003 by ERA members. These have always been resolved within the governance of the Code. No incident has yet resulted in a public sanction. It is very rare for suppliers to breach the Code in this way. It is (as it is in the npower case) invariably down to individuals who decide to operate outside of the Code, and this can sometimes be difficult to detect quickly.

Independent Code Panel

Supporting the Code’s governance framework is the Code Panel whose members are independent and come from a variety of backgrounds, including consumer representation and the wider business field. The Panel is the means whereby appeals from Code Members against decisions of the Code Manager will be heard, and it will also take an overview of the operation of the Code and put forward recommendations.

Working with industry for further improvement

Since ERA assumed responsibility for AES much work has been done by AES with its Members to ensure that Members have appropriate procedures and processes in place which enable them and their Sales Agents to comply with the Code. AES works closely with its Members who are continuously working to improve sales practices across the industry.  Complaints to energywatch on sales practice have fallen by 97% since the Code has been in place. 12 million houses are called on every year and this has resulted in half the population switching their energy supplier.

                                                                                                                               
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