Mis-sold business energy claims are becoming more and more common, businesses are discovering that they have been misled by energy brokers or TPI’s (Third Party Intermediaries) as they are sometimes known. The company and the brokers that work for them, who sold you the energy deal owe you a duty of care and transparency. They should be operating with your best interests at heart and get you the best deal, but for the most part their motives are money driven.
Ofgem (Britain’s energy regulator) brought in new rules about 5 years ago for suppliers and brokers to be more transparent with their fees and commissions to avoid mis-selling.
Suppliers and brokers are advised to sign up to Ofgem’s industry-wide code of practice, and businesses are advised to only use such brokers. It is believed that 90% of microbusinesses (between 1-9 employees) use brokers for their energy deals meaning there is quite a high chance that they have been mis-sold and could have a strong case for making a business energy claim.
Unfortunately, for the most part this isn’t the case as there is a conflict of interest, many of the salespeople are receiving commission from the energy supplier. The brokers will sometimes tell you they act as an ‘introducer’ and that they get paid an ‘introducers fee’, it is usually more complex than this and they are in fact trying to hide their commissions from the companies they are selling to pull the wool over the eyes of their clients, this is why these claims are sometimes referred to as ‘hidden commission energy claim’ or ‘TPI Claims’.
How have Business Energy Claims Come About?
The broker or salesperson should be transparent with the amount of commission they are receiving from your contract, although there are many cases where these fees/commission are hidden or not explained to businesses in full. If they have been hidden from you then you are entitled to claim back every penny that you were secretly charged. Decades of bad practice from suppliers, brokers and consultants has led to a multi-billion-pound problem of energy mis-selling to businesses.
Have you been missold energy supply?
Unfortunately, most of these brokers are not upfront about their charges. However, there are a minority that will have been entirely upfront about these charges, they will explain how the commission is calculated and tell you the rate and explain that your unit charge will increase by the amount of that commission.
So, if you have taken out a contract through a broker and you don’t remember them making mention of any of these fees then they have most probably tried to conceal this, meaning you could be eligible to make a business energy claim.
Energy Broker’s Hiding Fees
It is not illegal for brokers to make commission off the energy deals they are selling to businesses. However, they must be transparent and tell you exactly how much they are making from the deal, by law they must adhere to this and not abuse their position of trust. This is a fairly new ruling and for years beforehand brokers were getting away with not being transparent at all about the amounts of commission they were making as well as using hard sell tactics to coerce businesses to take contracts.
It was common for energy broker commission to be lied about on contracts and the ways in which they are paid this. Some either didn’t mention this at all or discuss the breakdown of there fees with clients and most stated that the suppliers paid them directly. The brokers would add on the commission, and it would be hidden on the bills given to the client, this commission was usually paid from the supplier to the broker. The biggest brokers had been found to be working with the top energy suppliers. The brokers would then give recommendations of supplier usually the one who would pay the broker the most in commission.
How do you figure out if you’re paying hidden fees on your energy contract?
If you can remember the conversation you had with your broker when you were finalising your new energy contract, did the broker do any of the following:
They told you they were offering a ‘free service’
They were vague about how much commission they’d earn from the sale of the contract
Tried to coerce you or use hard-selling tactics to take a deal with a longer contract length than you initially wanted or were looking for?
The broker was vague around how they said they earned commission.
They told you that they didn’t receive commission from the supplier.
Can You Make a Business Energy Claim?
If you think you have been mis sold an energy contract or charged commission you were not aware of, then you are eligible to make a business energy claim and recover every single penny that was hidden from you over the duration of your contract. How much you will receive back will depend on 3 main factors, firstly the amount of hidden commission that was added onto your energy contract, the length of the contract and finally the amount of energy the business consumes.
Here’s a simple example of how a business energy claim might look:
You’d consider the contract length, so for example let’s say it’s 2 years and your average consumption per year is 100,000 kWh, so in total over the contract that would be 200,000 kWh. You’d then multiply the amount of kWh you have used by the price per unit for example 10p per kWh.
200,000 kWh x 0.10p = £20,000 is what you will have paid in energy costs over the duration of the contract. Let’s say you were paying 2p in hidden commission- meaning the actual unit price would be 8p. 200,000 kWh x 0.08p (0.10p – 0.02p) = £16,000. So, the £4,000 difference is what you’d be due back.
Is this just a rough example of how you could calculate what you are owed, yours could be a lot more depending on your energy usage and the unit price you were paying over the duration of your contract!
If I’ve been Mis-sold How Can I Claim?
If you believe you have been mis-sold a contract and think you may have a Business energy claim then the first step is to try and resolve this with your supplier by writing to them and providing them with any evidence of things that don’t look right on your contract. If you still have details of the dialogue you had with the salesperson who sold you the contract this is good evidence.
If nothing comes from your conversations with the company after your complaint, then after 8 weeks you can take the free route and speak to the Financial Ombudsman. They will give you free advice and act impartially seeking to resolve the mis-selling on the contract if there is any, but they only have limited powers when it comes to hidden commission, so you may be better off going to a claims management company. There are no repercussions if you lose this case, you will only be stuck with the energy bill and contract you already had.
SK Lloyds solicitors will do an initial assessment of your contract and find out whether you have been charged any hidden commission. Moving forward we can work on your business energy claim and recover all monies you have unknowingly paid over the duration of your contract. We offer a No Win, No fee service, you will only pay a fee if your claim is successful.