The Charity Commission, Fundraising Standards Board, and energy regulator Ofgem are looking into claims that Age UK encouraged its beneficiaries to sign up for expensive energy tariffs in return for donations of £6m a year from the energy company E.ON.

An investigation by the Sun newspaper alleged that a tariff recommended by Age UK in 2015 was an average of £245 a year more expensive than E.ON’s cheapest rate, creating an overspend of £37m a year for the 152,000 customers currently on the deal.

The charity has said it disputes the Sun's interpretation, and has issued a lengthy statement.

The Energy Secretary, Amber Rudd, has referred the issue to the energy regulator Ofgem. She said: "People expect a fair deal when it comes to their energy bills, not a rough deal.

"I take very seriously this allegation that Britain's pensioners are being misled, so immediately contacted Ofgem who will now investigate this urgently and report back to me."

A spokesman for Ofgem said: “Ofgem rules require energy companies to treat consumers fairly when they are marketing and selling energy. Ofgem has a track record of punishing firms who mislead consumers and we will look carefully at these claims.”

This morning a spokesman for the Charity Commission told Civil Society News that: "The Commission is aware of concerns raised in the media regarding Age UK’s partnership activities with E.ON,” the spokesman said.

“The Commission is in contact with both Age UK and Ofgem to determine what regulatory role the Commission might have and any action that might be necessary.”

The FRSB is also looking at whether aspects of the Code of Fundraising Practice have been breached.

Andrew Hind, chair of the FRSB, said: "We have contacted Age UK with regards to claims made about its commercial arrangements with E.ON. While the terms of the energy deal lie firmly under Ofgem's jurisdiction, our focus will be to assess whether the charity has breached any aspect of the Code of Fundraising Practice and we will work closely with Age UK and Ofgem to establish this.”

In a statement Age UK said: "We strongly reject the allegations and interpretation of figures.
 
"The Age UK Fixed Two Year tariff offers a good deal and was the market leading two-year tariff when it launched in January. For example, the Age UK Fixed Two Year tariff is over £100 cheaper than the E.ON Standard Variable tariff and is cheaper than other variable tariffs.
 
"When customers contact us they are offered a choice of all four E.ON tariffs and many choose the one-year tariff or variable option, however many prefer the reassurance of a fixed tariff for two years.

"We have no exit fees so customers can move anytime if they find a different deal. This means they can pick a tariff that best suits their needs. E.ON also offers a free price alerts system that lets customers know of potentially better deals as soon as they’re available.
 
"The long-term commercial partnership includes a typical commission to Age UK of £10 for each customer. Financial support beyond this is not linked to customer numbers.

"The past two years have seen much volatility in the energy market and with E.ON’s support we have managed to maintain our level of charitable work over this time. This reflects the strength of the 14-year relationship." 

Too much focus on bad news 

Speaking on BBC Radio 4’s Todays show this morning, Acevo chief executive Sir Stephen Bubb said Age UK had been “very clear in dismissing the story”.

“Age UK say very clearly that this is an extremely good deal for older people. If there is going to be an inquiry, then we will find the facts. They are very happy to have this deal explored and I think we should wait and see what that result is.”

Bubb said he was “very worried” about the “dangerous drip, drip of charity’-bashing stories” in the media.

“It’s very damaging to the sector as a whole,” he said. “We can’t have this continual drip of charity-bashing unless we undermine the work that charities as a whole do for older and younger people.

“We rely at a time of austerity increasingly on the work that charities do in the communities. I am very concerned that the government and newspapers seem to be too happy to have a go at charities and not print the good stuff about what we do.”

A statement by E.ON said the Age UK tariff was "the cheapest product of its type in Britain when it was launched, a two-year fixed deal, and when we launched our current one-year fixed product, it was also the cheapest in Britain".

It said customers were welcome to switch deals to its new cheaper rate.