We successfully had our client released from a three year contract on the grounds it had been mis sold by a broker using fraudulent behaviour.
The Situation
A food service supplier asked us to represent them and tender for a supply contract on their behalf in competition with a broker as a benchmarking exercise. We raised the tender as instructed and won the contract beating the broker by providing a more competitive quote with a new supplier.
However, our termination of contract request to the incumbent supplier was rejected. Upon investigation we identified that the broker had fraudulently phoned the incumbent supplier posing as the client and claimed to be vacating the property, so they could end the contract early and transfer the meter to their preferred supplier ahead of the renewal date.
The Approach
Firstly, we requested that the original supplier raise erroneous transfer proceedings on the grounds that had the broker not fraudulent initiated a change of tenancy request then the client would have been in a contract at the point of transfer was requested and it would not have gone ahead.
The fraudulently arranged incoming supplier rejected our request to reverse the transfer on erroneous grounds citing a signed contract from the client. Using the signed Letter of Authorisation from the client, we requested a copy of the signed contract as the client had no knowledge of signing this contract nor was there any audit trail proving the client received / signed off a contract.
We were sent a call recording of a verbal contract, the pre-sales and post-sales recordings and a deadlock letter from the broker’s incoming supplier. By sending the deadlock letter with the recordings, it prevented us from raising concerns with the supplier over their integrity – ultimately, the broker’s incoming supplier deemed it valid and chose not to investigate further.
After consulting with the client, we escalated the complaint to the regulatory body on the client’s behalf as all avenues of escalation with the supplier had been exhausted. As the regulatory body only regulates suppliers (not brokers) we based the case on the supplier’s duty of care to their customer and stated that they should have carried out a more in-depth investigation, but chose not to as they were financially benefitting from the contract. The key points raised were:
- Call doctoring – The length of the call recordings did not match the client’s phone log i.e. verbal contract was compiled of two separate phone calls, and the pre-sales call was ten minutes shorter than the actual phone call on the client’s call log.
- Mis-selling – During the pre-sales call the client recalled being advised that a 7.5% direct debit discount would be deducted from quoted rate and that his monthly bills would be capped at £700. It is reasonable to assume that this information had been given by the broker during the missing ten minutes of the call.
- No letter of authorisation – No letter of authorisation had been signed by the client authorising the broker to legitimately work on his behalf to arrange contracts.
- Knowledge of fraud – The broker’s incoming supplier was aware from the erroneous transfer request that the broker had committed fraud to enable the transfer of supply.
The Outcome
The regulatory body instructed the supplier to release the client from the contract, allowing us to facilitate the transfer to the clients preferred supplier, which is ongoing and saving the business over £3500 over the contracted period compared to the broker’s contract.
