Do I need to sign a Letter of Authority (LOA)?
In most cases, yes.
Brokers may be able to give you an idea of the prices they’re able to offer over the phone, but to provide an official quotation and contract offer, they’ll usually need a Letter of Authority.
A bespoke quote requires specific information about your existing contract, which a broker will often need to validate with your current supplier. Due to data protection laws, suppliers need your written permission before they’re able to release such information, and a Letter of Authority provides this.
A Letter of Authority come in a couple of varieties:
- A ‘Level 1’ or ‘Soft LOA’ – authorizes a broker to obtain information relevant to providing a quote.
- A ‘Level 2’ or ‘Full LOA’ – authorizes a broker to obtain the same information as a Level 1, but also allows them to enter into contracts on your behalf.
There’s no reason for a broker to ask you to sign a Level 2 LOA in order to quote. If you do sign such a document, you should understand that you’re giving them permission to enter into any contract they wish on your behalf, and at any rates they see fit.
Another thing to be mindful of is any LOA that grants a broker ‘exclusive’ rights to negotiate your contracts, because this again takes away the control you have. If a broker is confident of their ability to deliver value, they should relish the chance to compete for your business and show their worth.
To provide a quote, they only need access to information relevant to the tendering process, which is typically no more than your current contract end date, consumption data and some further details about your meters.
If the end of your current contract is approaching, and the broker has offered to serve termination notice on your behalf, you may choose to include permission to do this on a Level 1 or Soft LOA.
It’s important to understand however, that if you want to retain complete control over the contracts you enter into, the LOA should not allow a broker to enter contracts on your behalf, or grant them exclusivity.
Tip: Read the wording and fully understand what permission you’re giving to a broker before signing a Letter of Authority. If you’re unhappy with, or are unsure about any part of it, ask them to provide a revised version with different wording.
If you have any questions, please feel free to contact us.
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