The Australian Competition and Consumer Commission has issued a draft determination proposing to reauthorise an industry code of practice for face-to-face energy sales undertaken by electricity and gas retailers.
Energy Assured Limited was formed by energy retailers to develop and manage the code, which applies when energy products are sold through house visits and, in the proposed new version of the code, in other face to face settings such as at kiosks at shopping centres.
The code was first authorised by the ACCC in 2011 and is aimed at ensuring better standards in face-to-face energy sales through the training and accreditation of sales agents, as well as self regulating the conduct of face to face sales agents and energy retailers in their dealings with consumers.
“The Energy Assured scheme has made a positive impact in educating sales agents about their obligations in dealing with consumers and in removing rogue sales agents from the industry,” ACCC Deputy Chair Delia Rickard said.
“The scheme provides a framework for training sales agents and provides for sanctions, including deregistration, for sales agents who do not comply with the standards set by the code.”
These standards include complying with all relevant laws applying to face-to-face energy sales. Deregistered sales agents are not able to be re-employed by any Energy Assured member for five years.
However, it is important that a scheme which purports to ensure better standards in face to face energy sales also has a strong focus on the responsibility of energy retailers themselves to comply with the Energy Assured standards beyond disciplining individual sales agents.
“The ACCC is concerned that the scheme, as it is currently operating, does not focus sufficiently on the accountability of energy retailers for the behavior of sales agents employed by them. This has the potential to limit the extent to which the scheme achieves its aim of improving standards in face-to-face energy sales,” Ms Rickard said.
Energy Assured has proposed to replace yearly independent audits of members’ compliance with the code with periodic compliance checks by Energy Assured. Given the concerns about the lack of focus in the scheme on the accountability of energy retailers for the behavior of sales agents employed by them, the ACCC does not propose to authorise this change to the scheme.
The ACCC has also proposed conditions of authorisation that would strengthen the independent auditing of members’ particularly in relation to whether any underlying systemic issues may be contributing to identified instances of sales agents not complying with the standards set by the code.
The ACCC also proposes to grant reauthorisation subject to conditions that Energy Assured strengthen the provisions of the code relating to sanctioning energy retailers where systemic breaches of the code are identified, including lowering the threshold for what constitutes a systemic breach.
The ACCC also proposes to grant authorisation subject to conditions which will strengthen the code as it applies to comparators who are engaged in face to face sales where they compare contracts available from a range of energy retailers. These proposed changes will require comparators, when engaged in face-to-face sales, to:
- disclose whether the commission they will receive for the energy contract they recommend to the consumer is greater than the commission they would receive for products against which the recommended product has been compared
- disclose to the customer all retailers offering services in their area and highlight those which the comparator has used as a point of comparison in recommending a particular contract
- upon a request to do so by the consumer, disclose underlying assumptions on which the comparison or recommendation is made.
As the code is an energy industry initiative limited to face-to-face contacts with customers, Energy Assured cannot require that its members also adopt these disclosure requirements for sales made by comparators by phone or online.
“The ACCC is currently prioritising work in the price comparison website area and expects to issue industry guidance for price comparison websites in the second half of 2014,” Ms Rickard said.
Authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.
Further information about the application for authorisation and the granting of interim authorisation is available on the public register.