All businesses need energy and, unlike for domestic supply, Ofgem does not cap commercial supplier profits. Navigating energy supply markets to find the most suitable gas and electricity contracts that offer the best value can be a challenge and most businesses, particularly SMEs, are unlikely to have the time or market knowledge to delve into the plethora of providers and contract options out there.

Step in, energy brokers. Brokers can do the groundwork with the requisite market know-how and secure the best option for a business on their behalf. In the process, one would expect a broker to be transparent about the options available and clear on any commission payable. Unfortunately, this is frequently not the case.

So, what do businesses need to know?

Are energy brokers regulated?

It’s important to be aware that Ofgem does not regulate or investigate energy brokers, and only a relatively small number opt to self-regulate and follow a prescribed Code of Practice. Consequently, whilst certain brokers may charge upfront or disclose their fees, many do not. Their practices are often misleading and, in some cases, fraudulent.

Energy brokers often operate on a commission-based model, which can lead to them mis-selling contracts for their own benefit by only offering their clients a limited number of deals from selected providers, from whom they are confident they will receive a commission.

Depending on how a broker’s commission structure works, the broker may even decide what rate should be charged. This means businesses may be paying over the odds without even realising and are being locked into long-term contracts that can span up to five years.

Top tips to avoid being mis-sold a business energy contract

Even if using an energy broker, a sensible first step for a business with an existing energy contract is to contact their supplier to see what they can offer, to act as a baseline. A quick check on one of the numerous comparison websites available would also help to gain an understanding of what sort of cost to expect.

When using a broker, it is important to:

  • Ask them which suppliers they represent. If they only represent a limited number, then they will not provide a full-market comparison and are unlikely to offer the best deal.
  • Ensure you understand their terms of service and where their fees are coming from. All brokers will receive a fee for negotiating a new contract, which may be a one-off payment or added to usage costs.
  • Ensure broker costs are included in the new contract in a transparent way.

There are various types of contract available, Ofgem offers useful information on these here.

For microbusinesses that operate from home and meet certain criteria may not need a business energy contract at all. Citizens Advice provides further detail here.

A new, binding contract can be agreed verbally over the phone, but it is advisable to request a written contract to review the offer, before agreeing to it. This way you can check key details including; if there is a cooling-off period; contract length and renewal provisions; costs or notice periods for early termination; any maintenance costs; environmental concerns.

What to do if you have been mis-sold

If you believe that your business or organisation has been mis-sold their energy contract, it may be possible to receive compensation. Our solicitors are experts in this field and are on hand to help. They will review your contract and determine whether it was mis-sold and what compensation options are available based on the facts of the case.

At RHL Solicitors, we operate on a ‘no-win, no fee’ basis, so there are no hidden costs for our services and no financial risk involved if the claim is unsuccessful.

Our specialist commercial litigation team will be happy to discuss your claim with you and, should you choose to proceed, pursue it in a timely and efficient manner to ensure you are fully compensated.

Our goal at RHL Solicitors is to secure an accurate settlement of the client’s losses in accordance with their best interests. This means pursuing these claims expeditiously and accurately so that clients are fully compensated.

RHL Solicitors will have no delays or waiting times in advising you on your situation and will be quick to get you the support and care you deserve.

Contact our specialist commercial litigation team who will be more than happy to discuss the matter further.