Energy brokers help businesses to navigate the highly saturated, and sometimes confusing, energy supply market to obtain a suitable business energy contract from a supplier on their behalf. These brokers owe businesses a duty of care to source the most appropriate and best value deal, or at least to be open and clear on advice about alternatives.

However, the lack of regulation over the energy broker market combined with a dramatic increase in the number of brokers, has led to increased cases of brokers making misleading statements about their commission structures or mis-selling contracts due to a lack of transparency.

To give an idea of the potential scale of this issue, out of the approximately 3,000 energy brokers in the UK, less than 10 per cent have registered for self-regulation, in which brokers follow a strict code of practice to ensure transparency with their consumers.

Whilst some brokers are honest about their fees or do charge upfront payments, the vast majority use commission models which are not always made known and can result in the customers energy spend being almost doubled.

A recent report prepared for the Office of Gas and Electricity Markets (Ofgem) around business’ interactions with brokers, revealed mixed views on whether brokers clearly identified themselves and provided accurate information. Only 23 per cent reported that brokers were upfront about the cost of their services.

Ofgem’s own investigation into energy brokers in 2020, found that micro businesses were too frequently being mis-sold business energy contracts. This lack of transparency could mean that businesses are paying more than they should be or are signed up to energy contracts that are not appropriate nor working in their best interests.

For all businesses, paying excessively for energy unnecessarily will always be detrimental, however for schools and other educational institutions it is even clearer to see how damaging it could be. Many are already operating on limited budgets and by paying over the odds for energy, will be spending money that could have been better spent on valuable resources, for example.

There are a wide range of practices currently used by several energy brokers that are, at best, misleading and, at worst, fraudulent:  revolving around a lack of transparency.

The Citizens Advice Bureau has identified eight practices which are detrimental to businesses and highlight three that occur most often and/or cause the most damage:

  • Mis-selling: selling consumers unsuitable contracts, presenting something as the ‘best deal’ or the ‘best price’ based on the broker’s commission, or contracts that do not appropriately meet their needs, such as proposing a long-term fixed deal.
  • Lack of transparency: not clearly presenting fees or specifying how much of the market was searched to find a price, for example only offering a client one business energy deal, despite stating they would conduct a full-market comparison.
  • Misrepresentation: failing to identify themselves as an intermediary by suggesting that they are calling from a supplier to get businesses to switch contracts or agree longer contracts.

As a business owner it is not always easy to recognise if you have been mis-sold business energy. One red flag to look out for early on, however, is if your energy broker did not issue you with a full written disclosure of how much they earned from your contract, whether that be a one-off charge or an on-going cost.

If you believe your business has been mis-sold energy, you may be able to seek compensation. Our expert solicitors will identify if your contract was obtained through an energy broker, assess whether your contract was mis-sold, and if so, identify the various types of mis-selling that may have occurred.

The amount of compensation that you may be entitled to will depend on the specifics of your individual claim, such as how long the energy contract is and the exact form that the mis- selling took.

At RHL Solicitors, once we’ve discussed your circumstances with you, we operate under a ‘no-win, no fee’ basis so that you can rest assured that there are no up-front or hidden costs for our services and no financial risk to you if your claim is unsuccessful. You’ll only have to make any payment if your claim is successful.

Get in touch with our team of approachable, highly experienced solicitors and legal advisors today:

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.

If you are concerned about the circumstances around you or your company’s claim, contact our specialist commercial/financial litigation team here and we will be more than happy to discuss the matter further. 

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.