Guideline 1 (2022): Customers of white-label arrangements are entitled to all protections of the Energy Retail Code of Practice

Customers of white-label arrangements are entitled to receive the same protections under the Energy Retail Code of Practice (the code) as customers of more traditional retail arrangements. Where a licensed energy retailer arranges its plans under different brands, all plans must comply with the code’s customer protections.

Purpose and application

In the retail of energy, white-labelling is where a licensee enters into an arrangement with a third party to sell energy under that third party’s branding. The third party is not licensed to sell electricity and gas and may sometimes be a participant in another industry looking to expand its product offering.

White-label arrangements may confer on the non-licensed entity significant influence and control over the sale of electricity. Both licensees and non-licensees should consider whether the arrangement may result in the sale of energy without a licence or exemption. This is in contravention of section 16 of the Electricity Industry Act 2000 and section 22 of the Gas Industry Act 2001.

Guidance

White-label arrangements are ordinarily underpinned by detailed contractual arrangements that divide the responsibilities of licenced and non-licenced entities. Care must be taken to ensure that the energy retail licensee is undertaking the activity of selling energy, and that the non-licensed entity does not engage in activities for which they are not licensed.

Consumers of energy offered under a white-label contract are entitled to receive the same protections under the code as customers of retailers that sell under their own branding. This guideline focuses on the following obligations:

• Explicit informed consent.
• Best offer notifications.
• Protections for customers experiencing vulnerability.

Explicit informed consent

Clause 7 of the code

This clause relevantly provides:

(1)     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…

Obtaining the explicit informed consent of a customer requires communicating clearly, fully and adequately all matters relevant to their consent. This will include informing a customer that, despite the branding, the contract for the service is with a different entity. This disclosure must be clearly and prominently displayed in marketing materials and contracts, not hidden in the small print.

Best offer requirements

These obligations are set out under clauses 108 to 111 of the code.

Clause 108 identification of deemed best offer (SRC and MRC)

This clause relevantly provides:

(1)       Where a retailer is required to carry out a deemed best offer check for a small customer, the retailer must identify the relevant deemed best offer for that small customer.

(2)       The deemed best offer must be…:

(a)       the plan that the retailer offers which:

(i)        is the lowest cost generally available plan or Victorian default offer applicable to the small customer having regard to the small customer’s usage history…

The code’s best offer requirements expect retailers to identify whether a customer is on the retailer’s best offer. This is done by comparing the customer’s offer with its lowest cost generally available plan or the Victorian Default Offer.

Any retailer who contracts with a third party to offer energy under a white-label must comply with the best offer requirements. To identify the deemed best offer, the licensed retailer must compare the customer’s current offer with all generally available plans offered by that retailer, irrespective of the brand name used to market or sell each offer.

Case study 1

The licensed energy retailer also needs to make it clear that the customer will be covered by all consumer protections under the code.

Clause 108(2)(a)(ii) paid affiliation or membership

This clause is concerned with best offers in the context of paid affiliations or memberships.

(2)        The deemed best offer must be…:

(a)        the plan that the retailer offers which:

(i)        …

(ii)        does not have as a precondition or condition that the small customer have or maintain a paid affiliation or membership with an entity that is unrelated to the retailer.

This clause provides that a deemed best offer will not include a plan featuring a condition or precondition that the customer have or maintain a paid affiliation or membership with an entity unrelated to the retailer. This exclusion does not apply to other membership or reward schemes that do not require payment by the customer.

Case study 2

Obligations in relation to customers experiencing vulnerability

A retailer must ensure that, regardless of the form of any white-labelling arrangement, its regulatory obligations are met. Code requirements aiming to protect customers experiencing vulnerability, should be paid particular attention in the consideration of any white-labelling arrangement.  For instance,

• customers experiencing family violence are entitled to protections in relation to account security and secure processes to avoid the need to repeatedly disclose or refer to their experience of family violence (clause 150 and 151 of the code). Any white-labelling contractual arrangements must ensure the retailer is meeting its obligations to provide these protections. 
• retailers must record life support customer details in a register of life support customers and residents when notified that life support customer resides, or is intending to reside, at a relevant customer’s premises (Division 5C, Part 2, Electricity Industry Act; Division 4AA, Part 4, Gas Industry Act). A retailer’s obligations to record this information will be enlivened, even if the notification is made to a third party if a customer is reasonably led to believe it was appropriate to engage with that third party about these matters.

White-labelling arrangements, that may be accompanied by complex divisions of responsibility, place customers’ welfare at risk, if those engaged in a white-labelling arrangement do not take sufficient care to ensure a retailer is meeting its obligations.

This guideline has been approved for publication by the commission pursuant to section 13 of the Essential Services Commission Act 2001. This guideline does not provide or create legal obligations. Its purpose is to assist compliance by regulated entities. Where relevant, identified areas of better practice or case studies are detailed in breakout boxes