Age UK has made millions of pounds by providing insurance and funeral services to elderly people, amid criticism of its commercial arrangements with a leading energy supplier.
The charity’s commercial arm, Age UK Enterprises Limited, provided almost half a million home, travel and car insurance policies in collaboration with Ageas Insurance Ltd in 2014-15.
The policies generated revenues of £21.9m, according to its annual report and financial statements for the year to 31 March 2015 – nearly half the total of the enterprise arm’s revenue of £47.6m.
Age UK Enterprises also provided 18,000 funeral plans in collaboration with Dignity, the listed funeral services company, as well as supplied energy to 152,000 customers through a partnership with E.ON.
The funeral plans generated revenue of £9.4m in addition to the £6.3m from the energy services.
The commercial deals helped Age UK Enterprises post a profit before gift aid and tax of £8.2m – down from £11.6m in 2013-14.
The arrangement with E.ON has been criticised for costing customers more than other tariffs offered by the supplier.
The Charity Commission said it had contacted both Age UK and Ofgem to determine whether any action was necessary.
Ofgem said it was “examining the claims”, adding: “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 at carefully at these claims.”
Energy Secretary Amber Rudd said she was taking the allegations “very seriously” and had asked Ofgem to investigate further.
A spokesman for Age UK denied that the charity has been pushing expensive tariffs.
“Age UK has worked with E.ON for the past 14 years, openly and above board, and they have been generous supporters of our charity over and above the number of customers on the tariff,” he said.
“We launched the most competitive, fixed two-year energy tariff available anywhere on the market on 20 January this year, with no exit fees. Energy prices change all the time and we have always advised older people to look out for new good deals and we will continue to do so.”
Acevo, which represents chief executives of charities, told the Financial Times, which first reported Age UK’s wider business arrangements: “Charities do engage with the commercial sector and that is not wrong if they do so ethically and transparently.”
E.ON and Age UK said they had no plans to end the arrangement. The charity said: “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.”
A spokeswoman for the energy supplier said: “Our current Age UK tariff was the cheapest product of its type in the UK when it was launched in January. Customers can switch between products at any time without incurring any costs.
“If a customer is on a fixed tariff and they opt in for a price alert, and if we issue a new tariff that is cheaper, we will automatically notify them of that. But in line with Ofgem’s rules we can’t switch people without their consent.”