It’s time to renew your business energy contract, or perhaps you’re expanding into a new office and need to make gas and electricity arrangements for this building. But the energy market is complicated, and time is scarce.

For this reason, many organisations and businesses contact an energy broker who will have the right expertise to trawl the energy market on their behalf and find the deal that best suits their needs and budget.

But there has been plenty of coverage in recent years of energy brokers mis-selling contracts, particularly to smaller businesses and organisations, at a cumulative cost of many millions of pounds.

So, how do you know if you can trust your broker?

Below are a few pointers and questions to ask yourself or your broker to establish whether they have your best interests in mind.

Self-regulation

Ofgem, the Office of Gas and Electricity Markets, is the government regulator for gas and electricity in the UK, but currently it does not regulate or investigate energy brokers. Some brokers, however, do voluntarily opt to self-regulate by following a Third Party Intermediary (TPI) Code of Practice, which they will usually share on their website.

This Code aims to protect business interests by following the principles that contracts should be fully understood by the client before they agree to them; they should be accurate and transparent; contracts should be professionally presented and; suitable to the specific needs of the customer.

Essentially, brokers that follow a Code of Practice should provide an honest and high-quality service, so choosing one of these brokers can provide some reassurance that they are trustworthy.

What signs should I look out for?

Energy brokers earn their cut in different ways. Often, they operate on a commission-based model, and dishonest brokers may mis-sell contracts by only presenting deals from suppliers they have a relationship with, rather than the best options from across the market. Whilst some brokers may charge a one-off fee directly to their client, others include their commission within the rate they offer, falsely inflating the supplier’s price, and may not declare this.

Tips on how identify whether your broker is trustworthy include:

  • Check that you are dealing with a genuine energy broker and not a sales agent for a supplier.
  • Any broker claiming their service is being provided for free should be treated cautiously. All brokers will make money out of setting up new contracts, ensure that you fully understand where your broker’s cut is coming from and any fees or charges.
  • What is your broker selling you? If the deals they are offering are from a limited number of suppliers, the broker may be pushing you towards a contract out of which they are confident they will make a good profit.
  • If you are being offered only longer-term contracts of up to five years, your broker may have their own interests in mind, because longer contracts can lead to higher commission.
  • New energy contracts are often set up over the phone. If you ask to be sent the energy contract offer in writing before agreeing to it, you can go through it properly to ensure you fully understand all the terms.

Ofgem have useful information on the types of business contract available.

Microbusiness contracts

Microbusinesses should be aware of recent policy measures to protect these consumers, who are especially vulnerable to irresponsible or dishonest energy brokers. From 1 December 2022, any energy suppliers dealing with microbusinesses must only work with brokers who are registered with a qualifying alternative dispute resolution scheme (ADR). In addition, from 1 October 2022, suppliers must include Third Party cost information within their principal contractual terms.

Microbusinesses are defined as employing fewer than 10 employees (or their full time equivalent) with an annual turnover or balance sheet no greater than €2 million; or they use no more than 100,000 kWh of electricity per year; or no more than 293,000 kWh of gas per year.

Have you been mis-sold?

If you believe that your business or organisation has been mis-sold an energy contract, it may be possible to receive compensation. Our solicitors at RHL Solicitors are experts and will review your contract to determine whether it was mis-sold and what options are available.

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.

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