Let’s be clear about this to start with – no one is suggesting that all energy brokers are bad. Most operate honestly as they look for the best energy deals for their business clients.
But not all are as honest as they could, and should, be when it comes to recommending certain suppliers for your firm.
Sadly, one of the biggest driving forces for numerous brokers is the financial rewards on offer for themselves; motivation that puts their needs ahead of those of their clients.
For instance, did your broker reveal what they made from arranging a new energy contract for your business? Did they set out what compensation they were earning from unearthing a great new deal for your firm? We suspect it’s highly likely that they didn’t.
And there’s a good reason for that.
Many don’t disclose that information because you – or whoever is tasked with deciding such matters at your firm – would certainly have had second thoughts if their broker was transparent about their personal motives for pushing a certain option forward.
Yes, you would expect them to take a fee for their input and most brokers take a fee from your new supplier. Some brokers may claim they offer their services for free – our advice is not to believe them.
But it’s the size of those fees, built into the unit price of your energy and adding up over the length of your new energy contract, that may raise an eyebrow or two.
You may have thought you were being introduced to a great deal for your business. Energy itself is, after all, big business, with £25bn spent each year on utilities by companies in the UK.
And it is believed that – with no official regulator protection – 90% of micro businesses (those with less than 10 employees) are likely to have been mis-sold their energy deal by a broker.
If your company has, at some stage, used a business energy broker then it’s highly likely you have been mis-sold your deal.
So, ask yourself – if you were told exactly how much was being added to your energy bill by a broker, would you still have agreed the deal they found for you?
If you have hired an intermediary to secure an energy deal for your business, you want them to do just that, rather than recommend an option that primarily benefits them.
Energy regulator Ofgem has vowed to crack down on unscrupulous selling by brokers in the UK and put an end to the business energy market’s lack of regulation. Their view is that the sector is riddled by a lack of transparency that leaves many UK businesses locked into pricey energy deals, arranged by a broker who trousered a healthy commission.
Ofgem’s aim is to have tighter regulating, including stringent monitoring of brokers selling energy deals so that information is transparent and the costs to brokers’ business customers are not unfairly inflated.
So, how can you decide whether your business energy deal was mis-sold? A couple of tell-tale signs to look out for are letters of authority and promises of government funding.
One ruse familiar to those who have been stung in the past is brokers duping clients to secure a signature on more senior letters of authority than they should have. These are then used to switch clients to a different energy supplier without their informed consent or knowledge, changes that can cause no end of hassle, and extra cost to the business.
If you are asked to sign a letter of authority by your broker, or any third-party intermediary, ensure you only sign a Level 1 letter of authority, which gives them permission to discuss your energy suppliers with third parties and no more.
Do not sign a Level 2 letter, as this hands your broker the same authority as a company director and can therefore sign your business up to new energy contracts, without your prior knowledge or approval.
Some unscrupulous brokers have also told their customers a government grant, amounting to tens of thousands of pounds, will be paid following their change to a new energy supplier. In these cases, the broker can take their fee while the client receives a cash boost in addition to benefiting from cheaper energy bills. Which sounds a great deal on the face of it.
There are just two problems with that. Firstly, the government has no such grant scheme. And the contracts the client is entering into are often far more expensive than they had enjoyed previously.
Your business may be losing money because you have acted on advice from an energy broker. It doesn’t matter whether it’s down to a broker’s incompetence or because they purposely put their own needs before yours.
If you are losing out it’s time you took steps to remedy the situation.
Your business could be owed significant sums of money if you signed up to what your broker told you was a great deal on your energy contract.
● Switching your energy supplier can take some time to arrange on your own but you will, in most cases, pay less by moving to a new energy supplier.
If yours is a microbusiness being run from your home it’s more than likely you won’t need a business energy contract. Contact the Citizens’ Advice Bureau if you’re not sure.
Before you can make a decision to switch you will need to find out:
- When your contract ends and how much notice you’ll need to give your existing supplier
- How much you pay per unit of gas and electricity (this is measured in kW/h)
- How much energy you use – your bills should reveal you annual usage
You can, of course, enlist the help of a reputable energy broker, as not all of them are guilty of mis-selling – just make sure you are clear on what they earn for hunting out a better deal for you.
Brokers and other third-party intermediaries’ mis-selling sees businesses in the UK vastly overpay for their energy supplies, with numbers stretching into hundreds of millions of pounds.
Barings Law’s team of experts can help you to discover how much your business has been overcharged. Our legal team can maximise your claim for compensation, with vast experience in recovering hidden commission for businesses who have fallen victim to fraudulent, negligent or innocent misrepresentation by brokers.
Ask yourself three questions:
- Were promises or assurances made to you, prior to switching energy suppliers, which have proved inaccurate, misleading or exaggerated?
- Did you act on the advice you received and enter into a contract because of the claims made by a broker or third-party intermediary?
- Did you suffer loss as a result, ie are your energy bills higher than they were or should be?
We can take on your case on a no-win, no-fee basis. If you feel you have been overcharged by a broker who was driven by financial motives speak to our legal experts on 0161 200 9960.
We can help you get back what you shouldn’t have paid out in the first place.
Mis-selling is misrepresentation by your lender or broker and can be divided into three basic categories:
- Fraudulent misrepresentation occurs where a false statement has been made knowingly, or without belief in the truth of it. Put simply, it means the broker acted dishonestly or recklessly
- Negligent misrepresentation is where a statement was made carelessly. While it means the broker did not act maliciously it does suggest they breached the duty of care they had to their client
- Innocent misrepresentation occurs in cases where there was neither neglect nor fraud – but where the customer was still misled
- You could have been sold the wrong deal because your business energy broker has been incompetent, or because they deliberately put their interests before yours.
Either way, if you have lost out, you may be entitled to cancel the deal and even claim compensation.
Barings Law’s team of experts can help you get the compensation the mis-selling of your business energy deal deserves. Call 0161 200 9960 for a free, no-obligation consultation.