What is an LOA and why might I be asked for one?
For anyone who has shown interest in switching their business electricity or gas supplier, they may have seen the term ‘Letter of Authority’. In the commercial energy space, a Letter of Authority or ‘LoA’ for short can be quite an important document. If you are unsure about these and want to know how they could be useful, our guide hopes to provide an in-depth explanation below.
Simply put, a Letter of Authority (LoA) is a legal document that enables customers to give someone permission to act on their behalf within specified limits. This document is normally used to put an agreement in place between three or more parties.
Customers will feel confident through a signed LoA that the party they have appointment to act on their behalf knows what it is doing. This could be for the following examples: personal information, account details, billing and additional business information.
What does a Letter of Authority have to do with switching business energy suppliers? The easiest and quickest way to switch business energy providers in the UK is to go through a commercial energy broker. Legally speaking, energy brokers are known as ‘agents’ in this context. They need your permission to switch your supplier and are unable to do so if they do not have the required authorisation.
For compliance, this authorisation/permission is typically achieved through a verbal agreement, contract in writing or a signed Letter of Authority.
An LoA can be used in multiple industries and are not exclusive to the energy sector. Other notable industries that you will come across an LoA are the financial and medical sectors. For example, you may appoint a third party to manage your personal or business finances or appoint someone to deal with a complex medical case.
Like any legally binding agreement, it is of utmost importance that you fully read and understand what permissions you are granting to the third party before signing the document.
Normally, a Letter of Authority will usually be valid for 12 months. This will also be similar across other sectors too, as it is an industry standard. Always check the duration of validity before signing as this should be stated on the document. A third party must clearly state if an LoA is valid for less than or more than 12 months.
Once this validity period expires, the business energy broker will not be able to speak to commercial suppliers on your behalf. If you wish for the broker to act on your behalf once more, they will be required to sign a new Letter of Authority.
Some may see this as additional administration work, but it is for your company’s benefit. After all, you would not want to give a third party lifetime authorisation to act on your behalf.
LOAs should follow a standard industry format. They should include in-depth information concerning all the relevant parties. Below is an example of what a typical LoA looks like:
Ensure that when you are completing a letter of authority that it is as accurate as possible. After all, small mistakes can be time consuming to correct. Here is a helpful list of tips to consider when completing an LoA:
Once a letter of authority has been signed and submitted, a personal account manager will be assigned to you. These expert advisors will now have the authorisation to manage the administration side of things, to enable them to make your business gas and/or electricity switch as smooth as possible.
When you sign a letter of authority, you’re not handing over the keys to your business. On the contrary, it is simply a standard industry process that gives a third party permission to act on your behalf when dealing with commercial energy suppliers. A great business energy broker will endeavour to remain completely transparent throughout the whole process and ensure that all rules and regulations are adhered to in the strictest manner.
Once a Letter of Authority has been submitted, it will usually be processed within several working days. You will be contacted to confirm that the third party is now able to act on your behalf for the relevant purpose(s).
Utility Saving Expert always want to look for new ways to make the lives of their users even easier. For this reason, we are able to provide you with our own letter of authority that you can use. This means you don’t have to take the time to create your own.
It is important to highlight that our letter of authority states that while we can gather information, negotiate and submit a notice of termination on your behalf, we do not have the right to agree on a contract without your authorisation. This means that you do not need to be concerned about signing up for something you did not agree to in the first place. You will choose your own tariff.
When dealing with energy brokers, a LOA should be included in your welcome pack, this will be sent to you after your initial enquiry. This gives you all the relevant information you need to better understand the straightforward transition process.
All that is required on your part is to print the Letter of Authority on paper with your company information (name, registered address etc.) and have it manually signed by an authorised signatory from your business. You can then scan and send the document via email or send it through the post.