By Tom Webster, Chief Commercial Officer at Legal Futures Associate Sentry Funding [1]
With many UK business having fallen victim to the rogue practices of cowboy energy brokers, it was encouraging to see the government drawing attention to the issue this month.
Energy affordability minister Amanda Solloway said the government would be cracking down on the rogue energy brokers who are targeting small organisations with thousands of pounds of hidden fees.
Many legal claims are currently being brought against energy brokers and suppliers in relation to arrangements that were not in a client’s best interests; or where clients were not told about commissions and mark-ups being paid to brokers. In a recent case in Leeds County Court, Weardale Entertainments Limited & another v Engie Power Limited [2024], an energy supplier was ordered to compensate a business client after the court found there had been a conflict of interest between the broker and client – with the broker able to decide both the size of its commission, and the length of the client’s contract.
Solloway said the government will be consulting later this year on plans to regulate energy brokers and other third-party intermediaries.
She also announced that access to the Energy Ombudsman is being broadened. Rather than being limited to ‘micro-businesses’ with fewer than 10 employees, the free Ombudsman scheme will be extended to encompass small organisations with fewer than 50 employees – thereby covering 99% of all businesses in Great Britain.
The Ombudsman has the power to order suppliers to provide compensation of up to £10,000 or take action to resolve issues – such as raising standards for their customers, or crediting customer accounts.
Action from the regulator
Alongside the government action, energy regular Ofgem has wider plans to improve energy services for businesses and other non-domestic customers. These include:
- A new requirement for energy brokers to provide full transparency over fees within their contracts, so customers can access the competitive choice they deserve
- A change in rules that will mean energy suppliers can only work with brokers who are part of a redress scheme, when securing small business contracts. Ofgem says this will ensure these customers always have access to free and fair support with any disputes, helping to rebuild confidence in broker services
- Signposting non-domestic customers to a range of redress routes in addition to the Energy Ombudsman, by allowing small organisations to raise complaints against their broker or supplier via alternative advice services, such as Utilities Intermediaries Association
- Expanding its Standard of Conduct rules for energy suppliers to ensure all businesses receive the same level of support with issues, such as making it easy for businesses consumers to contact their supplier and access the information they need.
With too many small and medium-sized businesses having lost out due to cowboy practices in the business energy sector, it is certainly time that government turned its attention to this issue; although with a general election looming, it remains to be seen what will become of its plans. Meanwhile Sentry Funding will continue to support [2] the growing number of businesses discovering that they have been mis-sold energy contracts.