EA/2023/0314.FP - [2025] UKFTT 01119 (GRC)

At the hearing the following issues were identified bv the parties:-

At the hearing a number of witnesses gave oral evidence based on written statements provided to the Tribunal.

Ms Nawaz is the Chief Operating Officer of Maxen Power. Her role entails overseeing the day-to-day operations of the Appellant. This includes implementing the Appellant's strategy and its business development. She is also responsible for developing policies and procedures to ensure compliance with the Appellant's regulatory and financial obligations. She is the single point of escalation for all staff and reports to the Appellant's sole director and shareholder.

She explained in evidence that she was responsible for overseeing the TPI agreement which was drafted by the Appellant's business development manager. She had previous experience in monitoring and quality assurance. She was responsible for making sure that the TPIs were complying with PECR, although she had no previous experience of this.

She explained that the Appellant is a commercial energy supplier and was incorporated on 27 July 2016. The Appellant entered the energy market in February 2018. Upon entering the market, the Appellant was subject to Ofgem's controlled market entry regime whilst its systems were being trialled. She explained that the responsibility for identifying suitable TPIs was the responsibility of the business development manager.

Ms Nawaz explained that the Appellant supplies only non-domestic customers. At the time that she prepared her statement, this amounted to 8,500 customers, but this had now expanded to 15,000 in the last two years. She said that the Appellant is a small organisation and has no internal or outsourced sales function and relies almost exclusively on TPIs, of which AT is one. She said that the Appellant had fewer than 50 employees.

She said that in her experience, all energy suppliers in the UK market rely on TPIs for introduction of new business. She explained that the role of a TPI is carried out by various types of organisations which can include switching sites, energy brokers, and any company that offers support with energy procurement. The function of a TPI is sometimes offered as one of a range of services. Some provide the customer with a comprehensive energy efficiency and procurement consultancy service. Others simply make introductions to a supplier and then arrange the contract with that supplier.

She agreed that Ofgem requires that a supplier must have sufficient controls over a TPI. She accepted that the Appellant is the controller of information for the purposes of the Data Protection Act and that the TPI is the processor of information. It was important to make sure that the right clauses are in place so that the supplier controls the actions of the processor under the DPA, making sure that they are complying with their responsibilities.

Ms Nawaz said that save for the requirements placed on the TPI by the TPI agreement in this case, the Appellant has no control over how the TPI operates or what it does. The Appellant plays no role in the TPI's marketing process because the TPI is marketing to its own clients and on its own behalf. It is not marketing for customers to refer specifically to the Appellant, and the Appellant does not expect it to do so.

Where a TPI is operating a call centre model, Ms Nawaz said that she would expect them to compile a call list from which they will contact prospective clients. She said that how they compile this list is a matter for them. She said that the Appellant would not expect the TPI to call numbers which were on a no-call list. She said that it was the business development manager's responsibility for overseeing this.

In relation to the PECR guidance on TPIs making calls, she would have looked at the Information Commissioner's PECR guidance and discussed this with the business development manager when negotiating with a TPI. She would have placed more reliance on the checklist than the guidance, but she was aware of some of the information in it.

Ms Nawaz explained that some suppliers, including the Appellant, provide base price books of tariffs to which TPIs can match their customers. TPIs will usually offer tariffs from a number of suppliers and then can match each customer to the most suitable tariff for their needs and circumstances. If that is the Appellant, the TPI then introduces the customer to the company.

She accepted that there was nothing to stop the Appellant providing no-call numbers if they were providing a price book of tariffs. However, she said that they did not know who the TPI were contacting, and the business development manager would have told them about the no-call list, but there was nothing in the agreement about PECR.

In relation to AT stating that the Appellant was their only customer, Ms Nawaz refers to the statement of Mr Siddiqui who said that was the position in February 2024, but that it was possible that AT would have more customers in the future. Ms Nawaz pointed out that Mr Siddiqui did not say that in the past the Appellant had been their only customer.

Ms Nawaz said that the Appellant is not a party to the initial contact and discussions between the TPI and the customer because that is a matter between them. the Appellant would receive no record of what has been discussed or why a particular decision has been made. The Appellant would not be involved in the process until they had been chosen by the customer as the supplier.

In relation to the due diligence process in the pre-contract phase, Ms Nawaz accepted that changes have been made to this process following receipt of the Ofgem provisional order. Ms Nawaz explained that although the Appellant would have an interest at the pre-contract stage, there was no regulatory requirement before contact is made with the Appellant.

She said that she would not expect there to be any physical or virtual inspection of the TPI because the nature of the relationship does not call for anything so intrusive. Given the number of such arrangements each supplier and indeed each TPI will enter into, this would simply not be practical or cost-effective for either supplier or TPI. However, she also accepted that following the Ofgem investigation, this approach had been deemed not to be appropriate, and appropriate changes have now been made for such inspections of a TPI.

Ms Nawaz said that most suppliers will carry out proportionate investigations before entering into a TPI agreement. This would often be done with an application form requiring essential information and warranties from the TPI. She said that the process was rigorous because the Appellant requested a lot of information.

Ms Nawaz explained that the Appellant also requires the TPI to confirm that they clean data from TPS/CTPS. She said that the quality assurance and self-assessment form which the Appellant uses with TPIs clearly states that the TPI is responsible for complying with UK GDPR as far as it relates to marketing preferences. The evaluation of the forms completed by the TPI is undertaken by the business development manager. This includes information about the TPI's telesales, confirmation of their checks, and their data protection process.

Ms Nawaz explained that when she refers to telesales, she refers to the practice of the TPIs who operate a call centre model which relies on cold calling. She said these TPIs are selling their services and not contracts. The business development manager will check that the TPI is familiar with the Commissioner's guidance on PECR.

Ms Nawaz explained that so long as the documents supporting the TPI application are adequate on their face, then that is sufficient for the Appellant. It will be for the business development manager to assess this.

In relation to not contacting customers, Ms Nawaz said that if a person or organisation says that they do not wish to be contacted, then the Appellant would add their telephone number to the TPI network's do-not-call list. She said that the Appellant obtains the customer's consent to add them to this list for circulation. She accepted that this meant that the Appellant had the power to tell TPIs who not to call. The TPI can access this list and the do-not-call list.

Ms Nawaz discussed the TPI agreements used by the Appellant. She said that it had not been drafted by lawyers. It happens to contain a number of clauses which have been carried over and which are not really relevant to the relationship and which are never enforced or even referred to. She accepted that some of the contract terms in the agreement contradict other terms.

In particular, she said that paragraph 18 of the agreement, which requires a TPI to prioritise the business of the Appellant over other entities, was not something which was enforced or expected to apply. She was asked if that was the case, how could the regulator be satisfied that other safeguards in the agreement were being implemented. Ms Nawaz said that the business development manager was responsible for this, and at present a lot of the documentation was being redrafted.

Speaking further about TPIs, Ms Nawaz said that the Appellant has no means of knowing how they have actually found their clients or advised them prior to the actual decision to proceed with the Appellant contract or whether they have complied with standards at that stage. She said that is a matter between a TPI and the client. Asked whether this was a reckless approach, Ms Nawaz said that they would only know about a problem if a customer subsequently complained to the Appellant.

She said that from the point at which a customer decides to place a contract with the Appellant, then the Appellant requires the TPI to follow a specific script which is included in the TPI agreement. She said that the Appellant receives a recording of this contract script call when the TPI makes the proposal to the Appellant on the customer's behalf. She said that this assures the Appellant that the TPI has complied with the Appellant's standards regarding the information provided at the point of contract and enables the Appellant to enter into the contract.

She emphasised that the TPI was acting on the customer's behalf and not on behalf of the Appellant. This was the case even though the Appellant pays a commission to the TPI when they refer a case to the Appellant. The TPI is acting on behalf of the customer and in their best interests.

Ms Nawaz was taken to the agreement document between the Appellant and the TPI. She accepted that although there was reference to data protection legislation and the GDPR, there was no reference to the PECR in the agreement:-

Ms Nawaz also accepted that the agreement contains provision for the Appellant to carry out monitoring and assurance measures in relation to a TPI. These include site visits to the TPI's premises to review sales processes. It can also include a remote audit and additional sales and contracts together with a request for evidence sent directly to the TPI outlining any issues raised. It was put to her that the Appellant had the possibility within the agreement to monitor TPIs to a considerable extent.

Ms Nawaz denied that AT's success meant that the Appellant were turning a blind eye to methods used by the TPI which should not have been acceptable.

Ms Nawaz explained that on 29 November 2023, Ofgem opened an investigation into the Appellant's compliance with its supply licence conditions. She said that in particular, the investigations related to micro business customer service standards, operational capability, deemed contract terms, supply to micro business customers, and customer transfer procedures.

The Appellant accepted the findings of Ofgem's investigation and submitted a voluntary payment to Ofgem's energy industry voluntary redress fund of £1.65 million. As part of this, the Appellant is now required by Ofgem to carry out audits of its TPIs. Ms Nawaz said that this is an audit of customers who are onboarding to the Appellant and not an audit of the initial contact between customers and the TPI.

It was put to Ms Nawaz that the concerns of Ofgem set out in their provisional order was that intelligence had been received from numerous sources alleging that TPIs believed to be acting on behalf of the Appellant are contacting non-domestic customers and professing to be their current supplier. In some instances, the TPIs allegedly present misinformation about the customer's supply, and the TPIs were acting on some occasions to change of supplier to the Appellant without the customer's knowledge or consent. Ofgem was not satisfied that the Appellant had demonstrated sufficient control over TPIs in a way that protects customers from potential harm.

Ms Nawaz was taken to an Ofgem press release dated 4 December 2024 in which it was announced that the Appellant had paid £1.65 million for customer service failures. The press release said that a recent investigation carried out by Ofgem found that the Appellant had breached its licence conditions by not having robust systems in place to protect its customers. This allowed TPIs to sign up new customers without their consent by claiming to work for other suppliers. The Appellant also failed to put an adequate complaint handling process in place and as a result had an unusually high number of complaints for an organisation of its size.

Other Ofgem documents state that the provisional order was issued against the Appellant Power due to serious concerns over the Appellant's change of tenancy policy and the monitoring of TPIs under contract who provided customer referrals to the Appellant Power. It was said that the Appellant had now complied fully with the requirements of the provisional order and it was revoked on 7 August 2024.

However, Ms Nawaz claimed that Ofgem were only concerned with what happened at the point at which a customer was referred to the Appellant. She said that Ofgem's concern was for the Appellant to ensure that its customers had agreed to any change in supplier and understood the effect of the contract first. She claimed that Ofgem made no criticism of any particular TPIs specifically during its investigation. Ofgem's findings related to operational points which the Appellant needed to remedy.

She claimed that Ofgem did not require the Appellant to take any specific steps. However, she accepted that Ofgem did direct that an independent audit should be carried out and a plan drawn up, and that the Appellant had implemented the order. This included a TPI site visit and audit policy and a TPI initial and continuous monitoring policy.

Ms Nawaz said that the Appellant had begun completing TPI site visits to audit TPIs. She accepted that there were checks and audits which they were now carrying out which had not been carried out before. In relation to quality assurance, she said that she had quarterly meetings with the business development manager and when necessary. When an audit takes place, there is a team that goes to carry out the audit in which she is included.

The approach of Ms Nawaz in oral evidence and indeed in her witness statement was to do her best to separate the Appellant's involvement with the practices of the TPI at the initial contact stage with the potential customer. She emphasised time and again that the TPI was acting solely on behalf of the customer and in the customer's best interests when the TPI first contacted the potential customer and was not acting on behalf of the Appellant at all. At times in her evidence she was vague about her role in overseeing the monitoring of the work of the TPIs and on a number of occasions she referred to the business development manager as responsible for the oversight of the TPI even though ultimately it is her responsibility as the COO of the Appellant to ensure that TPIs are correctly regulated and controlled by the Appellant in accordance with the law, guidance and regulations. Her evidence did not seem to recognise at all that the Appellant might have a role in being responsible for the way that customers were contacted by the TPI and what they were told prior to any agreement with the customer that their business would be referred to the Appellant.

Mr Jordan gave evidence at the tribunal. He said that he was a consultant to the Appellant and that he is an energy consultant engaged by various clients including energy suppliers and energy consumers. He said that he had worked in the energy industry since 1996 and for the last 10 years as an industry consultant. He said his role with the Appellant primarily entailed the provision of general advice in relation to trading positions and ensuring access to market is suitable for their needs. This includes involvement in some commercial aspects of the Appellant's business and ensuring compliance with regulatory expectations set by the regulator Ofgem. His witness statement provides background information about the Appellant as a relatively newly created business operating on a small and streamlined structure. He accepted when asked that in his statement there is no mention of no-call lists and no mention about PECRs. Mr Jordan confirmed that the Appellant relies wholly on TPIs to introduce business to it but that there was nothing unusual about this.

He said that the term TPI covers a wide range of organisations which offer various services. These might include energy brokerage, energy consultancy, energy procurement, advice on energy efficiency, bill checking, reconciliation and the recovery of overpayments. He confirmed that regardless of their size, suppliers are required to comply with their supply licence conditions (SLCs) which are set by the regulator Ofgem. Mr Jordan was taken to parts of Ofgem's provisional order which set out that a licensee must ensure it has and maintains robust internal capability, systems and processes to enable the licensee to efficiently and effectively identify likely risks of consumer harm and mitigate any such risks and to comply with relevant legislative and regulatory obligations. Mr Jordan did not believe that this directly includes TPIs. He accepted that his witness statement does not refer to sufficient control or monitoring and that the purpose of his statement is more generic.

Mr Jordan's evidence was that when performing the role of an introducer, the TPI neither acts for nor represents the supplier. The TPI's role is to introduce a potential customer who wishes to enter into a particular supply contract and administer the formation of that contract on the customer's behalf. The customer is a client of the TPI and the supplier will pay a commission to the TPI for the introduction if a contract is successfully arranged and goes live. He said that the TPI adds the fee to the contract cost and then gets it back from the supplier. He accepted that there must be an agreement with the supplier and that the introduction is because of the agreement with the supplier. There is an incentive to introduce customers. He said that there would always be a TPI agreement in place but he thought that a TPI did not necessarily read the agreement. His view was that the TPI's wider relationship with the customer and the manner in which that relationship is founded or conducted falls outside the supplier's knowledge and control.

He accepted that the supplier can exert some influence on this through the terms of its introduction agreement with the TPI and to some extent is incentivised to do so. He likened the role of the TPI in the energy market to that of a mortgage broker in the mortgage market. The mortgage broker acts for the borrower and recommends and arranges mortgages with the bank. The bank pays a commission to the broker in return for the introduction. He said that the mortgage adviser is likely to be on an introduction panel for the bank. Under the panel agreement the bank will require certain minimum standards of conduct from the advisers. However, they do not perform a sales role nor act on the bank's or pension provider's behalf. However, when Mr Jordan was asked for further information about how the relationship between a mortgage broker and a bank is set up, he confirmed that he had no first-hand knowledge or understanding of this.

Mr Jordan said it was a matter for the TPI how it contacts potential clients or obtains its information. A supplier will generally have no direct control over how the TPI chooses to run its business or source its clients. He accepted that the supplier could try and influence how the TPI worked. He doubted whether it would be possible for a supplier to monitor TPI calls as there would be sensitive information which related to other suppliers included in those calls. He accepted that a code of conduct in an agreement would be expected to be complied with. This could include not ringing anyone on the no-call list or misleading customers as to the identity of the individual calling on behalf of the TPI or acting unethically. However, he said this is the limit of the supplier's powers and the supplier has no direct oversight in respect of the TPI's conduct prior to the introduction of a supply contract. This is subject to whatever monitoring is agreed and imposed. Overall, he was of the view that the Commissioner had misunderstood the role of a TPI in this case.

Mr Jordan set out the official definition from Ofgem of a third party in its online guidance entitled ‘Alternative Dispute Resolution Scheme for Brokers and Third Party Intermediaries: What Your Micro Business Needs to Know’, which states that ‘third party means a third party organisation or individual that either on its own or through arrangements with other organisations or individuals provides information and/or advice to micro business customers/consumers about the licensee's charges and all other terms and conditions and whose payment or other consideration for doing so is made or processed by the licensee.’

He states that the Commissioner's conclusion that a TPI has made marketing calls on the Appellant's behalf or at the Appellant's instigation is a fundamental error on both counts and misconstrues the relationship between the Appellant and the TPI.

Ms Mitchell has worked for the Commissioner's Office since 2004 and is a lead case officer with duties including the handling of regulatory investigations concerning contraventions of PECR. She was assigned to the energy sector during 2020 to 2021.

Ms Mitchell states that the Appellant came to the Commissioner's attention in April 2021 in connection with enquiries being made by the City of London Police in relation to several broker companies operating in the energy supply industry. Ms Mitchell says that in April 2021 she carried out a number of online checks and discovered that there were a large number of client complaints which had been made about the Appellant. These included 8 complaints to the TPS and a further 4 complaints made to the CTPS.

Her statement details the investigations that she carried out in relation to a number of telephone numbers which appeared to be linked to the Appellant. She issued third party information notices to telephone companies to obtain more information. Her investigations into complaints and telephone numbers continued throughout 2021, and as a result of the investigation, AT was identified as having been assigned one of the numbers she was investigating.

Open source research took Ms Mitchell to AT’s website where they were described as a business process outsourcing company who specialises in providing flexible, high-quality customer support outsourcing solutions with an emphasis on inbound and outbound communication channels encompassing phone, live chat and email. She also discovered a training document dated 17 March 2021 which announced AT’s position as an independent energy supplier in the UK and that AT had acquired the commercial and domestic licence for supplying electricity and gas in the UK as Maxen Power Supply Limited.

On 10th December 2021, the Commissioner sent an initial investigation letter to the Appellant outlining the requirements of PECR, the enforcement powers of the Commissioner and asking several questions relating to the Appellant's compliance with PECR. The letter included a redacted copy of 6 of the 24 complaints.

In January 2022, the Appellant responded to confirm that they worked with a number of TPIs including AT and stated that the Appellant had not received a single complaint that their TPIs had breached the guidelines of TPS or PECR. the Appellant included a copy of the agreement between itself and AT dated 7 July 2020.

On 21 February 2022, Ms Mitchell sent an email to the Appellant seeking further information including a detailed description of the procedure used by AT for screening numbers against TPS/CTPS and any explanation given by AT for calls made to registered numbers by those organisations. She also sought details of additional checks carried out by AT prior to making any calls. She asked for details of any monitoring or assurance undertaken in relation to AT. She asked what action the Appellant had taken against AT in response to their apparent failure to comply with the Appellant's code of conduct.

Ms Mitchell said that the information gathered during the course of the Commissioner's investigation indicated that the Appellant had instigated overseas call centres including AT to make unsolicited direct marketing calls to UK businesses in contravention of PECR.

As a result, Ms Mitchell documented the findings in an investigation outcome record which includes investigation conclusions, recommendations and enforcement action, a record of the subsequent decision to impose a penalty, a record of the penalty setting meeting and decision.

She rejected the Appellant's argument that TPIs such as AT were independent contractors. Her reasons for this were that there was a signed agreement between the Appellant and AT. The agreement stated that for the purposes of data protection legislation, AT acts as the appellant's data processor. The agreement also restricts AT from providing services to competitors of the Appellant. the Appellant pays AT commission for successful sales and AT is bound by the Appellant's code of conduct. The Appellant provides AT with a call script to use at the point of sale. the Appellant provides AT with access to the Appellant's portal to see pricing, retrieve quotes, register contracts and monitor customer registration and payments. There is a training document which says that AT have acquired a licence for supplying electricity and gas in the UK as the Maxen Power Supply Limited. There is evidence that in call recordings provided to the Appellant by AT, AT said they were calling on behalf of the Appellant.

Ms Mitchell stated that she considered whether the contraventions of the PECR were serious and decided that they were serious as, between 1st January 2020 and 31st December 2021, the Commissioner and the TPS received 25 complaints about unsolicited direct marketing calls made from numbers used by AT to make calls on behalf of the Appellant. The complaints included people who had received repeated calls despite having asked for the calls to stop and callers who had used aggressive and misleading sales tactics.

Ms Mitchell said that she thought that the 25 complaints listed were likely to represent only a small fraction of the actual contraventions given the apparent use of false names, spoof numbers and overseas telecoms providers. She considered the contraventions were deliberate as on many occasions the identity of the caller was withheld, and suppression requests were ignored.

Correspondence preliminary to enforcement was sent to the Appellant who responded that if anybody was not compliant it was AT and not the Appellant and that any penalty considered appropriate should be imposed on AT and not on the Appellant.

On 30 May 2023, the Commissioner served the Appellant with a monetary penalty notice and an enforcement notice.

In her oral evidence, Ms Mitchell supported the contents of her written witness statement. In particular, she was of the view that it was hard, if not impossible, to identify all the sources of calls which led to complaints against the Appellant, because of the use of spoof numbers, false company names and overseas providers. It was correct that only one overseas call centre, that of AT, had been identified.

She was asked about the part of her statement where she identifies the Appellant as a broker, but Miss Mitchell confirmed that this was information she had received in the referral from the City of London Police. The reference to ‘broker’ was from the police and not from her.

It was put to her that the script which was identified as being used by AT on behalf of the Appellant was only used at the point when AT had agreed that a referral would be made to the Appellant. Ms Mitchell confirmed that there were no complaints about the use of this script at this point in the transaction. However, she was of the view that the Appellant should have been aware of previous breaches and complaints, and that this should have informed the due diligence that they should have carried out.

She was asked about the list of reasons why the Appellant's representations were dismissed. The thrust of the questioning to her was that AT had gone off-piste, and the failings identified were of AT and not of the Appellant, and that this explained why the Appellant had not taken action where there had been complaints against AT. In general, Ms Mitchell supported the case set out in the monetary penalty notice and the reasons why it was imposed.

Mr Russell Roach also gave evidence. He works for the Data and Marketing Association UK Limited and one of their subsidiaries, the Telephone Preference Service Limited (TPSL). He has worked for TPSL since February 2009.

The TPS is the official central register of telephone numbers of subscribers who do not want to receive unsolicited direct marketing calls. The TPS file consists of residential, sole trader and partnership telephone numbers. Corporate subscribers such as private limited companies, public limited companies, large organisations etc. can register their telephone numbers with the CTPS in order to prevent the receipt of unsolicited direct marketing calls. Both fixed and mobile numbers can register with the TPS or the CTPS.

Mr Roach explained in his written statement that it is a legal requirement for all organisations not to make unsolicited direct marketing calls to numbers registered on the TPS and the CTPS. In practice, this means that those making unsolicited direct marketing calls must screen the list of telephone numbers they want to use to make such calls against TPS and CTPS files.

Mr Roach explained that the ICO is required to maintain a register of numbers allocated to subscribers who have notified them that they do not wish, for the time being, to receive unsolicited calls for direct marketing purposes. When consumers who are already registered on the TPS wish to complain about an unsolicited call from a business, they would go on to the TPS website. When making their complaint, the consumer provides details of the company that called them and the number of that company.

Mr Roach said that once a complaint is submitted, his team will review the complaints, and this includes calling the numbers the complainant has listed in their complaint and carrying out searches of that number on open-source websites. If there is sufficient information to match that telephone number with an organisation, then the number will be marked as valid and contact will be made with the organisation about the complaint made about that company. In addition, an email or letter will be sent to the offending organisation.

Mr Roach said that with regards to the Appellant, there was a list of valid and invalid complaints, and letters were sent to the Appellant regarding these complaints. In his evidence, Mr Roach confirmed that there were four letters sent to the Appellant in 2020 and 2021.

He explained that it is possible, for example, for a TPI to obtain a TPS licence which provides them with the list of people who don't want to be called. It is also possible to contact the website a number of times per day to obtain a list. There are also companies who provide list services to TPIs, and they can obtain a different kind of licence.

Mr Roach explained that AT was not registered with CTPS for a licence until 5 December 2023, which was a week after the Ofgem investigation opened against them. It would have been possible for AT to have procured the information from another company who had the licence.