Explicit Informed Consent: Energy Industry Refresher

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If energy selling is your core business activity and you operate in NSW, SA, TAS, or QLD you require a retailer authorisation. In this article we examine explicit informed consent, an critical compliance obligation, and how it applies to authorised retailers in the above states.

Explicit informed consent is required to ‘switch’ a consumer from one retailer to another. Following extensive news and political coverage of energy costs, we are seeing an increase in the numbers of consumers ‘switching.’ Today we look at the elements of explicit informed consent, compliance failures, and risk factors.

Explicit informed consent is one of the most important concepts in the energy industry.

Explicit informed consent is a key protection and it is critical to ensuring that customers are confident engaging in the energy market,”…The AER takes any failure by retailers to meet this obligation very seriously, and will take enforcement action in appropriate cases.” – AER Board Member Jim Cox

Why Explicit Informed Consent (EIC) is important

Explicit Informed Consent is required for a variety of transactions including where a consumer switches to or between authorised retailers.

“Protecting vulnerable consumers and promoting confidence in the retail energy market are ongoing priorities for the AER,” – AER Chair Paula Conboy

Compliance Failures 

The Australian Energy Regulator (AER) has taken action against electricity retailers who have failed to obtain EIC.

“In 2015, the Federal Court ordered by consent that EnergyAustralia Pty Ltd (EnergyAustralia) pay penalties of $500 000 for failing to obtain the explicit informed consent of customers.

In separate concurrent proceedings brought by the ACCC, the Federal Court imposed penalties of $1 million on EnergyAustralia and $100,000 on its telemarketing agent Bright Choice, after finding that they had made false or misleading representations to consumers.

In 2017, Simply Energy paid penalties of $60 000 for failing to obtain explicit informed consent (EIC) before entering customers into new contracts. Simply Energy previously paid penalties of $80 000 in 2015 in relation to alleged breaches of the explicit informed consent obligations in 2014.”

– Source: https://www.aer.gov.au/news-release/simply-energy-fined-60000-for-alleged-failure-to-obtain-consent-before-switching-customers

The focus of the AER can be considered against their wider regulatory oversight- the below is taken from the AERs 2016-2017 report: https://www.aer.gov.au/retail-markets/performance-reporting/annual-report-on-compliance-performance-of-the-retail-energy-market-2016-17

Explicit Informed Consent

What is needed for EIC

The AER published a helpful Compliance Check back in 2015. The Compliance Checkpoints to the following three areas as key to EIC:

Explicit Informed Consent

Risk Factors

We have identified the following risk factors in relation to EIC:

Explicit Informed Consent

If you have any questions about EIC please get in touch.

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