When used to allow an energy broker to offer you a quote, this type of agreement (also known as an ‘exclusive Letter of Authority’), gives the broker exclusive rights to negotiate your energy contracts.
By signing it, you surrender your right to get an alternative quote from a competing broker.
It can mean that you’ve agreed in advance to take whatever contract offer the broker recommends, regardless of how competitive it is.
If a broker is confident in their ability to secure some of the best priced contracts around, they should be happy to compete for your business, rather than taking steps to ensure they don’t have to.
The difficulty with this type of agreement is that they’re not always easy to spot, as they can look and read almost exactly the same as a standard letter of authority, with the only difference being the inclusion of the word ‘exclusive’ in the main text.
If you decide that you really want to use a particular broker, and they insist on exclusivity, make sure you ask for clarification of a few things in advance, particularly:
- What their recommendations are based on
- Which suppliers they use
- What margin they add to your rates
The issue of the brokers margin being disclosed, and confirmed in writing, is particularly important with an exclusivity agreement. With no reason to ensure their prices are competitive, an unscrupulous broker may see an exclusive LOA as an opportunity to add a huge margin to your rates.
Tip: Read the wording of any Letter of Authority that you receive carefully, and fully understand what you’re agreeing to before signing it. Also, if the broker wants exclusivity, ask yourself whether this is to benefit you, or them.
We never ask for exclusivity, so if you’d like to give us the opportunity to compete for your business, contact us