Residential Sales Compliance Manual 2017 v2.0[1]

Residential Sales
Compliance Manual
Accountable Person: Head of Residential Sales
Operations and Transformation
Produced by: UK Compliance
Version 2.0, April 2017

Contents
Introduction Page 3
Governance and Ownership Page 6
Policies and Procedures Page 8
Training, Development and Comms Page 11
Assurance, Monitoring and Improvement Page 13
Supporting Processes and Systems Page 16
Risk Assessment Page 21
Document Control Page 23

Introduction
Purpose
E.ON has adopted a standard Maturity Model to assess the maturity of the control environment for Residential Sales. This
model uses six pillars to provide a view of the overall control environment ranging from “Unstructured” to “Optimised”:
1. Governance & Ownership: The process by which the RUUK Board and its committees oversee E.ON’s businesses,
people, policies, and reporting to satisfy its regulatory responsibilities
2. Policies & Procedures: Policies & procedures established to address organisational, legal, and regulatory
requirements
3. Training, Development & Communication: Programme of internal communications and employee training regarding
laws, regulations, standards, and policies
4. Ongoing Assurance, Monitoring & Continuous Improvement: The existence of internal controls, testing, and
independent compliance monitoring mechanisms to determine the effectiveness and efficiency of controls
5. Systems & Support Processes: Integrated IT systems and processes exist which are designed to support and
satisfy regulatory and compliance responsibilities (including Sales/CRM, pricing and MI/reporting process and
solutions)
6. Risk Assessment: Identification and evaluation of significant compliance risks and controls
The purpose of this document is to use these six pillars to describe how E.ON ensures that its governance and
control framework for residential energy sales remains in a “Proactive” (E.ON’s target) state.

Scope
The scope of this document is limited to residential energy sales, switches and renewals undertaken by E.ON or its
representatives.
• Sale means any new gas and/or electricity customer who is transferring to an E.ON product/tariff from another supplier
• Switch means any existing gas and/or electricity customer who is staying with E.ON, but changing their product/tariff
• Renewal means any existing gas and/or electricity customer whose fixed term product/tariff has ended, but who is
staying with E.ON on a new product/tariff
This document excludes all sales to customers outside of the residential energy business, e.g. the sale of solutions and
installation services to residential customers within B2M and the sale of energy and solutions to SME and Corporate
customers within B2B.

Context
This Sales Compliance Manual forms part of a hierarchal suite of documents relating to residential sales compliance, as
summarised below:
• Accountable Persons Handbook (paragraph 2.4): top-level document that defines the “must do” requirements
and desired customer outcomes for residential sales, switches and renewals.
• Sales Compliance Manual: sits underneath the Accountable Persons Handbook for Residential Sales and explains
how E.ON delivers the “must do” requirements and desired customer outcomes, as set out in the Accountable Persons
Handbook, in a consistent way across the residential business. This document also signposts to the relevant specific
policies and procedures.
• Specific policies and procedures (section 3): sit underneath the Sales Compliance Manual and are designed to
describe each attribute of the controls framework in a way that addresses all organisational, legal and regulatory
requirements.
The above documents should be reviewed together.

Governance and Ownership
This section describes the process by which the Board and its committees oversee E.ON’s businesses,
people, policies, and reporting to satisfy its regulatory responsibilities in relation to residential sales
compliance.
1.1. Governance Framework
E.ON has a clear and recognisable governance structure in place to oversee ongoing sales compliance performance and
any emerging risks and issues. Sales compliance performance within the residential business is governed by a
Residential Sales Compliance Steering Committee chaired by the Head of UK Compliance and attended by the
Accountable Person for Residential Sales and the Head of Downstream Regulation. The Residential Sales Compliance
Steering Committee reports into a Sales Compliance Board whose leadership includes the Strategy & Corporate Affairs
Director (chair), the Managing Director of Residential and the UK HR Director who meet monthly.
These meetings form part of E.ON’s formal meeting landscape and have clear decision-making and governance
structures to ensure that risks and issues are effectively reviewed and escalated.
Links: E.ON’s formal meeting landscape, Terms of Reference, Meeting minutes

1.2. Ownership
In April 2015, the Board approved the use of a 3 Lines of Defence model within its downstream energy business. This
approach is commonly used, particularly in Financial Services, to structure roles, responsibilities and accountabilities for
decision making and risk management. Within the 1st Line of Defence, the Head of Sales Operations & Transformation
has been appointed by the Residential Executive as the Accountable Person for Residential Sales. In consultation with
the Board (and with advice from supporting functions such as Regulation), it is the role of the Accountable Person to:
• Set the required compliance and fairness outcomes and risk tolerances for Residential Sales.
• Measure compliance against these outcomes by receiving and consolidating information from a number of
Responsible Persons within the business.
• Consult with the Residential Executive (and Board or other Risk and Compliance governance committees) on
performance against the outcomes.
• Put in place appropriate governance to meet the required outcomes in all parts of the business.
Links: 3 Lines of Defence Model, AP model

Policies and Procedures
This section describes the policies and procedures established to address organisational, legal, and
regulatory requirements.
2.1. Policy Management Framework
E.ON has a Policy Management Framework in place to ensure that post-implementation reviews of the relevant
Residential Sales compliance policies are undertaken and to assess whether the new policy launches are effective and
embedded. There is clear ownership for ongoing maintenance and coordination of compliance handbooks and policies &
procedures by UK Legal (Senior Compliance Lawyer) and UK Compliance (Compliance Governance Officer).
2.2. Standards for Residential Sales Conduct
E.ON’s Standards for Residential Sales Conduct define the standards of expected behaviours and ways of working to
deliver Fair Customer Outcomes for Residential Sales. The document supports E.ON’s Residential Sales Policy.
Links: E.ON’s Policy Management Framework, Standards for Residential Sales Conduct

2.3. E.ON Policy for Fair Selling
E.ON’s Policy for Fair Selling is designed to:
• Ensure we deliver fair outcomes in our sales, whilst supporting our aspiration for business growth.
• Establish the standards of sales conduct a customer can expect.
• Provide guidance for operational decision making including how we interpret the regulatory objectives for fair selling.
• Help deliver our strategy.
It applies to Board and Senior Leaders within E.ON RU UK and is implemented through the Ways of Working framework.
2.4. Accountable Persons Handbook
For Residential Sales, an Accountable Persons (AP) Handbook has been prepared to support the Accountable Person
with their compliance responsibilities. The AP Handbook includes information on the “must do” requirements for
Residential Sales, as well as information on the processes, risks, controls and metrics against which the Accountable
Person will be measured.
Links: Policy for Fair Selling, AP Handbook

2.5. Sales Compliance Manual
This Sales Compliance Manual describes in one document how E.ON ensures governance and control of sales
compliance against the Maturity Model.
2.6. Sales Compliance Framework (RAG)
E.ON has rolled out a single compliance approach to all front line staff involved in the sale or switch of residential energy
products. The framework, referred to as the RAG framework, broadly covers the implementation of call guides for advisors
to follow when having any sales based conversations and independent monitoring of sales compliance by UK Compliance.
Links: Monitoring Framework and Guidelines

Training, Development and Comms
This section describes the programme of internal communications and employee training regarding
laws, regulations, standards, and policies.
3.1. Licence to Sell
Licence to Sell is a consistent induction and training approach designed to enable all front line staff, including front line
managers, to evidence their competence to sell effectively and compliantly. It aligns with the Sales Compliance
Framework (see 2.6) and E.ON’s Competence Assurance model (see 3.2). Ownership of all of E.ON’s compliance
training curriculums and materials, and required sign-off of training materials is defined to ensure the compliance training
is appropriate and complete.
3.2. Competence Assurance
Sales competence is defined through a number of indicators including training records, the attainment of minimum
standards of compliance monitoring and effective performance. E.ON has developed a competence assurance model
that can be used to demonstrate the competencies for each individual involved in the sales process and a system to
consolidate this information.
Links: Licence to Sell, Competence Assurance Model

3.3. Communications
E.ON provides clear and consistent information on current and upcoming sales compliance initiatives in the form of
meetings, briefings, emails and presentations to individuals involved in sales activities. These include, Fit to Fly, Customer
Impact Meetings, Performance Review Calls, Compliance Calls, All Hands Calls, Business Review Meetings and
Resourcing Meetings.
Links: Communication Library

Assurance, Monitoring and Improvement
This section describes the internal controls and independent compliance monitoring mechanisms to
determine the effectiveness and efficiency of controls.
4.1. Appropriate compliance monitoring
Sales compliance monitoring is carried out exclusively by the operationally independent Compliance Monitoring team
within UK Compliance. Monitoring is against the RAG framework (see 2.6) and reflects the residential sales Target
Operating Model (TOM) which ring-fences telephony based sales to specific internal sites. A minimum of 10% of randomly
selected sales calls are audited by UK Compliance with the daily output fed back to Advisors and management teams.
UK Compliance endeavours to meet a 2 working day SLA (from the date the call is received) to provide feedback to
ensure appropriate follow up and learning where required. There is a clear distinction made between compliance
monitoring and assurance as a 2nd Line of Defence function and quality assurance as a 1st Line of Defence function.
Links: UK Compliance Organogram, Residential Target Operating Model, Compliance Monitoring End
to End Process

4.2. Compliance Monitoring methodology
E.ON’s aim is to get to 100% for overall sales compliance, (a measure of Established Advisor Compliance >13 weeks), but
97% is considered to be an acceptable target for a “Green” status. Underneath this, 90% to 96.9% is reported as “Amber”
and less than 90% is reported as “Red”. Overall sales compliance is a measure of total sales calls assessed minus those
that have an actual financial detriment to a customer (i.e. sales calls assessed as “Red”) using the following definitions:
Red: the definition of a “Red” sales call under the RAG framework is an “error which may mean the customer has
made an incorrect decision, incurring financial or other major detriment.” The customer is contacted immediately by
UK Compliance following the identification of a “Red” audit to ensure that an apology is provided and all errors are
put right (including providing correct information, making account adjustments and/or cancelling the contract).
Amber and Brown: whilst not used in the calculation of the sales compliance scores, the RAG framework also
captures sales calls where an improvement is required. These are defined as “Brown” (a potential or future financial
impact) and “Amber” (a failure to follow other areas of the conversation guide without a financial impact to the
customer). These are captured and fed back to the frontline by UK Compliance as a way of continuously improving.
Green: where a sales call is found to be fully compliant is categorised as “Green” (no action required).

4.2. Compliance Monitoring methodology (continued)
Importantly, the framework has a mechanism to quickly identify very serious outcomes. These are categorised as
“Chequered Blue” and defined as “any unacceptable actions resulting in the customer being misled as to the financial
impact of their decision.” Due to the seriousness of these cases, an immediate investigation is triggered and the customer
is contacted (if required).
The monitoring framework includes robust reporting and escalation procedures to the appropriate committees within the
Sales Compliance governance structure.
4.3. Quality Assurance
Quality Assurance is centralised and consistently applied and is owned by the Service Quality team. The Service Quality
framework provides clear guidance to measure compliance and service quality including consistent scoring frameworks,
approaches and reporting within the Quality Assurance teams.
Links: Monitoring Framework Definitions, Service Quality Framework, Performance Management
Guidelines

Supporting Processes and Systems
This section describes the integrated IT systems and processes which are designed to support and satisfy
regulatory and compliance responsibilities (including Sales/CRM, pricing and MI/reporting process and
solutions).
5.1. Call recording
The ability to be able to monitor all calls is essential to having a robust sales compliance monitoring capability. In
November 2016, E.ON implemented a new (NICE) call recording solution that introduced full (100%) call recording
capability covering all Advisors with the right to sell across all sales sites.
5.2. Customer guides
Call guides have been developed as part of the RAG sales compliance framework and include checking of customer’s
existing tariff when carrying out quotes and capturing accurate consumption data from customers. The call guides have
been trained out to all advisors.
Links: Customer guides

5.3. Marking guidance
E.ON’s RAG framework includes the implementation of marking guidance for Auditors within UK Compliance to follow
when auditing sales conversations.
5.4. Ways of Working framework
Ways of Working (“WoW”) is a Business Process Management framework rolled out within E.ON’s downstream energy
business. The WoW framework provides a consistent framework for mapping business processes, obligations and the
associated risks and controls. Residential sales processes have been mapped by the WoW programme to ensure that all
sales process risks are identified.
Links: Monitoring Guidelines, Sales Process Maps

5.5. Change management
A centralised change control and governance processes for all sales compliance related change is in place and is
overseen by the Sales Compliance Steering Committee. The process manages sales compliance change to ensure that
all change, including amendments to existing processes and the implementation of new processes, goes through the
appropriate governance for impact assessment and approval prior to implementation. It covers all key change decisions
from sales strategy through to product development, fulfilment and front line sales and service.
5.6. Maturity Model
E.ON has adopted a standard Maturity Model to assess the maturity of the control environment for Residential Sales. This
model uses six pillars to provide a view of the overall control environment ranging from “Unstructured” to “Optimised”.
E.ON’s target state for residential sales is “Proactive”.
Links: Change Management Framework, Maturity Model

5.7. Hotwire
Hotwire is a set of tools and processes to help employees raise issues if they think something is getting in the way of us
doing the right things right. It’s also a place for employees to raise ideas and suggestions to improve things for E.ON’s
customers.
5.8. Customer Journey Engine
A system driven Customer Journey Engine, (formerly known as MiMo), automates the sales processes for Advisors has
been implemented in Home moves and Prepayment. It is an integrated front end system providing a guided journey for
advisors and removes “human error” non-compliance.
Links: Hotwire

5.9. Sales Compliance Reporting
Lead metrics for Sales Compliance are Established Advisor Compliance >13 weeks (97% target) and Maturity Status
(“Proactive”). There is a suite of operational and executive reporting to measure these and other sales compliance
performance and root cause failures. The majority of sales compliance reporting and insight is produced by UK
Compliance and is used by Advisors, Team Managers and the Accountable Person, as well as independent insight for the
sales compliance committees, Residential Executive and the Board.
5.10. Issue Management
UK Compliance has an Issues Management team to ensure that compliance issues are managed in a consistent and
timely way. When new sales compliance issues are identified, the Senior Compliance Issue Resolution Manager will get
the right experts together quickly to create a virtual Issue Resolution Team and will facilitate a standard process and
providing fast access to advice, tools and templates at all stages of the process.
Links: Sales Compliance Reports (Exec, Steering and Board), Issue Management Handbook

Risk Assessment
This section describes E.ON’s processes to identify and evaluate significant compliance risks and
controls.
6.1 Risk appetite and measurement
Overall risk appetite and tolerances are defined by the Board that sets the parameters within which the residential sales
business operates. There is appropriate MI, (and measures), defined to effectively monitor performance in line with the
agreed standards and tolerances which is used to trigger appropriate management intervention, including:
• UK Compliance Customer Compliance and Fairness report: gives the Board clear oversight over compliance and
fairness (including for residential sales) across the company on a monthly basis
• Fair Decision Form: completed when a fairness decision is required when a scenario or change has a direct impact
to customers
• UK Risk CRAM: sales compliance risk assessed monthly using the UK Risk CRAM (part of E.ON’s Corporate Risk
Management Framework & Policy) to ensure there’s a strong handle on new and emerging sales compliance risks at
Board level to drive action.
Links: Customer Compliance and Fairness Report, Fair Decision Form, UK Risk CRAM

6.2 Risk and Compliance Matrix (RACM)
At an operational level, there is risk register together with business owned controls and control measures that assess the
effectiveness of the sales compliance operating environment resulting in proactive risk management through the Sales
Compliance Steering Committee. As well as the obvious controls associated with monitoring, other controls include items
such as the effectiveness of induction training and the monitoring of key sales systems.
Links: Corporate Risk Management Framework and Policy, Sales Compliance RACM

Document Control
This document will be reviewed annually with the AP and all Reviewers and formally approved at the Sales
Compliance Board. Each of the persons named will receive a printed copy and this document will be published
in an online format for other users to access.
As part of general housekeeping should any ad-hoc changes be requested via the AP or Document Owner,
each quarter these will be considered and circulated via email to Reviewers and the Sales Compliance Board
for approval.
Responsibilities
Accountable Person: Pam Boyington, Head of Residential
Sales Operations and Transformation
Reviewers
Head of UK Compliance
Head of Regulation
Document Owner: Compliance Governance Officer
Version Control: Senior Governance Manager
Sign-off: RU UK Sales Compliance Board