Utility Warehouse became an energy supplier in 2013, having bought its 770,000 customers from Npower. It’s now one of the largest energy firms besides the Big Six and currently says it has more than 600,000 customers.
Utility Warehouse doesn’t advertise heavily, but relies on customer agents and paid endorsements from stars instead. Partners (or agents) are given incentive's to sign up new customers.
Besides gas and electricity, Utility Warehouse sells contracts for other services including home phone, mobile and broadband. It charges customers for these in one monthly bill. Customers can benefit from discounts, the more services they take from Utility Warehouse. Find out if Utility Warehouse's prices are right for you by comparing gas and electricity prices using our independent energy comparison service.
Major energy scheme fronted by Joanna Lumley promises its ‘partners’ can earn thousands, but it doesn’t quite add up.
It’s a money-making opportunity being promoted by Joanna Lumley where, for just a few hours’ work a week, “you will quickly find yourself earning an extra few hundred pounds each month”. With a bit more effort, she says, “you could earn thousands of pounds each month”.
Sure enough, the accompanying literature holds out the tantalising prospect of a potential income of £2,340 a month – about £28,000 a year – which is more than the average UK salary.
Our number-crunching suggests that even if “thousands” a month just means £2,000 (or £24,000 a year), only a maximum of 879 people could have earned that amount in the 12 months to April this year. And even for that to work, all the other 40,000-plus people signed up would have to have earned nothing at all.
So who is behind this scheme, and is it a scam? And what has Lumley, this year’s Bafta fellowship recipient and all-round national treasure, got to do with it?
The Absolutely Fabulous star is the new face of Utility Warehouse, an energy and communications company that some people will not have heard of, but which is a major player with more than 600,000 customers. It is unusual in that it doesn’t advertise, isn’t keen on price comparison websites and doesn’t seek national press coverage. Instead, its services are promoted by an army of independent “partners” or agents who earn commission by encouraging their friends and family to sign up for its gas, electricity, landline, mobile and broadband services. In some ways it’s the Avon or Tupperware of the energy industry, but critics point out that the agents even have to pay £100-£200 to become a salesperson, and that the buyers of its energy deals are paying over the odds.
Utility Warehouse says it is important to understand that “we are presenting illustrations of what is achievable by potential new partners, as opposed to any form of guaranteed income”, and that there is “huge variation” in levels of activity and therefore earnings. It adds that it is confident it is “not taking advantage of” its partners.
The partner payments scheme is legal, though trying to get your head around its byzantine system of commissions and fees, plus the jargon – there’s something called the “stairway to success” with eight different levels of partner – takes some doing.
To become a partner you pay a joining fee of £100, or £199.75 if you are not a customer. You earn money from the customers you sign up, plus you can recruit other partners. And when they sign people up, you earn a small share of the money they spend too. The company says there are “customer gathering bonuses” averaging £20 for each person you sign up, plus “fast start bonuses” for new partners worth up to £1,000, “residual income” (ongoing commission from the people you have signed up), “group residual income” (ongoing commission from the customers that those in your “team” sign up), and “QUIP” payments (a way of accelerating your residual income).
In one promotional video, Lumley – who is the latest celebrity to plug the company; others have included Dawn French and Jennifer Saunders, and Terry Wogan – says: “Spend a few hours a week building your business and you will quickly find yourself earning an extra few hundred pounds each month. Keep going, work a little harder and you could earn thousands of pounds extra each month … It could earn you financial freedom for life.”
Another video states that “thousands of partners … are already receiving a life-changing residual income every month”. And a document that partners can download from the website to explain the scheme to would-be recruits states you could earn £2,340 a month in group residual income. This assumes you will be receiving a 30p per person per month commission from 7,800 customers signed up by your team.
It’s not hard to find people who say they are pocketing decent sums. On YouTube we found a utility warehouse video of a former police officer, Jimmy Chapman, who says: “I earn more every two days than I used to earn in the police in a month.”
There is little information in the company’s recently published annual results (for the year ending 31 March) about payments to partners, but it’s enough to do some calculations. The results disclose that there are 41,717 registered partners and that the average number of customers per partner is a little over 14.
Elsewhere in the document is a small section about “distribution expenses”, which include the share of the company’s revenue that it pays as commission to partners. This figure was £21.1m for the year. Dividing that pot between the 41,717 partners gives an average of £505 per person per year, which is £42 a month, or £9.73 a week. And that’s before their own operating costs, the joining fee and tax are taken into account. The partners are self-employed and responsible for paying their own tax.
And woe betide if any utility warehouse customers sign up and then cancel or default on their first bill – you will be stripped of the customer gathering bonus you received for them, as these are clawed back in such a scenario.
However, it has also been suggested that many people who sign up for the company’s gas and electricity are paying more than they need to. Just a few months ago, Ofgem revealed that 94% of Utility Warehouse’s energy customers were sitting on standard variable tariffs, which the energy watchdog says are “usually more expensive than other deals”. That’s the highest percentage for any big utility firm. And only this week, Ofgem disclosed that Utility Warehouse’s dual-fuel standard tariff customers could typically save £148 a year by switching to the company’s cheapest deal.Mark Todd, who runs price comparison site Energyhelpline.com, says those on Utility Warehouse’s dual-fuel standard deal could typically save £277 a year by switching to the cheapest deal on the market.
Read the full utility warehouse report here :- https://www.theguardian.com/money/2017/jul/08/get-rich-quick-utility-warehouse-energy-scheme-joanna-lumley