Explicit informed consent (EIC) is fundamental to transactions that occur in the energy market including the transfer of a customer from one retailer to another. One of the most serious types of breaches by an energy retailer is a failure to obtain a customer’s EIC when required by relevant regulatory obligations. The consequences of non-compliance are serious with the new civil penalty provisions in both NECF and in Victoria. With so much at stake, how can retailers reduce the risk of non-compliance?
What is explicit informed consent?
Explicit informed consent is given by a customer when a retailer, or the retailer’s agent, has clearly, fully and adequately disclosed all matters relevant to the consent of the customer to a transaction, including each specific purpose or use of the consent. Explicit informed consent may be given either in writing, verbally or electronically. A customer who provides EIC must have the capacity to do so.
A person’s capacity to provide EIC depends on their level of understanding. Where, for example, a customer does not speak English, they would not be able to provide EIC unless information and disclosures were provided to the person in the language in which they are fluent.
The Victorian definition
An extended definition of EIC is provided by the Essential Services Commission in the Energy Retail Code of Practice (ERCOP) in clause 7,[1] extracted below:
Explicit informed consent to a transaction is consent given by a small customer to a retailer where: (a) the retailer, or a person acting on behalf of the retailer, has clearly, fully and adequately disclosed in plain English all matters relevant to the consent of the small customer, including each specific purpose or use of the consent; and (b) the small customer gives the consent to the transaction in accordance with subclause (2); and (c) the small customer is competent to do so; and (d) any requirements prescribed by this code of practice for the purposes of this subclause have been complied with.
To obtain EIC pursuant to the ERCOP in some instances, such as where a retailer is seeking to enter into a customer retail contract, a retailer must do certain additional things (for example provide clear advice under clause 38).
Under the ERCOP retailers are required to provide training to any person (including employees, agents and contractors) acting on its behalf who is engaged in energy marketing activity on the requirements of EIC. Compliance Quarter has developed comprehensive off-the-shelf training in areas required under the ERCOP.
Exempt operators
EIC is not only relevant to authorised and licensed retailers. Exempt operators require EIC for a number of transactions and as such exempt operators must ensure that they have adequate disclosures, training, processes and controls in place to ensure that EIC is obtained for relevant transactions.
Introducing Guardian
Over recent months we have been working on a machine learning tool to analyse sales call recordings. Guardian allows energy retailers to conduct automated checks on call recordings prior to processing sales and transacting in accordance with the ERCOP, NERR and NERL. Guardian produces reports on calls and identifies areas of non-compliance.
Guardian will be useful to energy retailers who conduct energy sales or verifications over the phone and will reduce the risk of non-compliance in such a critical area as EIC. If you are interested in discussing Guardian or our off-the-shelf EIC training, please get in touch.
[1] Requirements to obtain a small customer’s explicit informed consent are imposed by clauses 10(1)(a)(iii), 26(4), 57(1)(a)(iii), 57(1)(b)(iv), 59(1)(a), 61(2), 62(2), 72(3)(b), 93(2), 113(1)(a), 120(1)(c)(ii), 139(2), 146(5), 166(7)(b) and 171(6)(b)
