Member Article

Scandal of business energy mis-selling set to continue despite Ofgem report

Businesses and charities will continue to lose millions of pounds from energy mis-selling despite Ofgem’s investigation into the practices of energy brokers, according to one energy expert.

Callum Thompson, chief executive of Business Energy Claims, believes it could be at least two years from Ofgem publishing its remedies in mid-2020 to actual implementation, which is expected April 2022 at the earliest.

The key areas of mis-selling by energy brokers are:

• Hidden commission fees • Favouring suppliers offering brokers the best incentives • Selling contracts with the best incentives • Misrepresentation – claims regarding number of suppliers searched for ‘best price’ • Negligence – failure to take sufficient care in advice • Serious misconduct such as creating fabricated supplier rates (in an attempt to favour the broker’s preferred choice), fictional price comparisons, agreeing contracts without the consumer’s consent.

Callum provided significant evidence to Ofgem and, while delighted the issue is being tackled, is frustrated that it is taking so long for real and sustainable change to be brought about.

Callum Thompson said: “Ofgem is forcing energy brokers to reveal hidden commission fees, and this is to be welcomed.

“The problem is that in the two years from identification of the issues to implementation of the recommendations many thousands of businesses are still being mis-sold to as they are unaware of the commissions still being paid.” In its report to Ofgem, Business Energy Claims noted widespread mis-selling taking place in the energy industry. In its experience, more than 90% of business energy contracts that have been sold by a broker have been mis-sold in at least one aspect although most involve several aspects of mis-selling. The cost of energy to a business customer is usually a significant proportion of its overheads. The levels of undisclosed commission and the extent of other aspects of mis-selling has meant Business Energy Claims has seen instances of customers going out of business or being at risk of going out of business as a result of the sharp practice employed by energy brokers. Callum Thompson added: “The disreputable practices of energy brokers sadly look set to continue for some time yet. “I hope that the remedies documented in the Ofgem report, and the involvement of the Department for Business, Energy and Industrial Strategy (BEIS) will put an end to this scandal. However, that still leaves a huge number of businesses and other organisations out of pocket, and we will continue to work with our legal partners to reclaim this money on their behalf.”
• Businesses, charities, and public bodies spend £25 billion per annum on energy (source Ofgem).
• There are several thousand energy brokers / Third Party Intermediaries (TPI) in the UK each offering their services to UK businesses • 67% of businesses use a broker/TPI to source their energy contracts (source Ofgem) – Business Energy Claims puts this figure much higher.

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