Is it safe to sign a letter of authority for a broker?

It can be safe if you trust the broker and read it first. A letter of authority lets a broker obtain your data and speak to suppliers on your behalf; it is not itself an energy contract. Check its scope and end date, and never sign for an unsolicited caller.

Last reviewed · By the Biz Energy editorial team · How we check facts

A letter of authority (LOA) is a document in which you permit someone, usually a broker, to act for you with your supplier. Wording varies from firm to firm, but it commonly lets them request your usage data, contract details and prices.

What an LOA usually does, and does not

  • Does: allow the broker to ask the supplier for information about your account.
  • Does not: by itself commit you to a new supply contract. Your energy contract is always with the supplier, not the broker.

The risk is in what comes next. Ofgem warns that verbal agreements are binding and that business contracts have no cooling-off period. An LOA gives a broker access and credibility, so a pushy one can move quickly from "just getting prices" to a signed deal.

Read these points before signing

CheckWhat good looks like
Who is namedA firm you have researched
ScopeLimited to getting data and quotes, not agreeing or terminating contracts
DurationA clear end date, not open-ended
Which sites and metersOnly the ones you intend to compare
How to cancelWritten notice, stated in the document

Safer ways to handle it

  1. Don't sign during an unsolicited call or visit.
  2. Ask for the LOA by email, so you can read it.
  3. Check the firm belongs to a dispute scheme; see QDSS.
  4. Strike out anything you don't accept and initial the change.
  5. Keep a copy and diarise the end date.

Be cautious of anyone asking for your meter numbers, bills and an LOA all in one call. See why cold calls happen.

Example

A pub landlord signs an LOA with a 12-month duration. Six months later he agrees a better deal elsewhere. He writes to the old broker and the supplier cancelling the authority, and keeps the email as proof. Without a written cancellation, the old broker could still ask for his data.

Revoking an LOA

We found no single official process for cancelling one, so follow any method the LOA itself sets out. In any case, send written notice to the broker and tell your supplier too. Ask for confirmation that no further data will be requested.

When to say no

Decline if the document is vague, undated, gives power to "negotiate and agree contracts", or if the broker rushes you or won't leave you time to read it. You can ask for a narrower version. Reputable firms accept that, while those that refuse are telling you something. Remember the broker cannot sign a supply contract for you without your agreement, so keep control of the final decision.

Data protection angle

An LOA lets someone see information about your account, and sometimes about people who work there. Make sure the document says what the data may be used for, and that it will not be passed to other firms for marketing. If you are a sole trader or partnership, the data may be personal data, so you have the right to ask what is held and to object to misuse.

Next steps

Read the full explanation in business energy letters of authority and the LOA glossary entry.

Sources

  1. Ofgem: Third party intermediaries - what your microbusiness needs to know
  2. Ofgem: Guidance for microbusinesses

General information only. Energy prices, rules and supplier terms change; check the latest position with your supplier, Ofgem or the Energy Ombudsman before you act.