Age UK has suspended its fixed-price energy tariff with big six supplier E.On, the two companies announced today, after the controversial deal came under regulatory scrutiny.
The elderly person's charity said that the two-year fixed deal will no longer be offered to new or renewing customers from midnight on Wednesday, although existing contracts will be unaffected.
There are no exit fees so customers can switch at any point without incurring a charge.
The announcements follow allegations in the Sun newspaper on Thursday that Age UK was raking in £6m a year from recommending tariffs to pensioners that were not actually the cheapest on the market.
The report alleged that Age UK received about £41 from E.On for every person who signed up.
The average Age UK/E.On deal would cost pensioners £1,049 a year – £245 more than E.On's cheapest rate last year, the newspaper claimed.
Energy regulator Ofgem and the Charity Commission said on Thursday that they would investigate the deal.
Age UK has defended the tariff, saying it was “the leading nationally available tariff of its kind” when it launched in December 2013.
“In a volatile energy market, it came with the reassurance of being fixed for longer than one year tariffs and also benefited from no cancellation fees, allowing customers to change without penalty at any time,” the charity said.
Age UK is in talks with E.on to agree the best way forward.
Ian Foy, Managing Director of Age UK Trading said: “we always aim to give our customers outstanding value for money. This decision, prompted by the planned tariff changes, will give us the opportunity to review the current situation.”
E.On said in a statement: “due to continued speculation regarding the partnership, both organisations feel it is right to pause and reflect on the best way for both parties to achieve their shared goal of helping customers”.