A lawsuit claiming more than £500 million in damages has been filed against several energy suppliers, including British Gas and SSE. The legal claim alleges that these companies unfairly inflated business costs by making “secret commissions” payments to brokers.
RGL Management is representing the claimants in this legal action and aims to recover substantial compensation for affected businesses. The lawsuit accuses energy firms like British Gas, EDF, Eon, Drax, ScottishPower, and Gazprom of engaging in unlawful and hidden commission payments to brokers, including Utilitywise and Utility Alliance, both of which are no longer in operation.
RGL estimates that up to seven in ten British businesses may be eligible to make a claim, and already more than 4,000 companies have expressed their interest in joining the action. According to their analysis, each claimant could be entitled to a potential compensation of £60,000 or more.
“For many years, energy companies acted with impunity to obscure hidden payments to brokers, artificially inflating costs for UK businesses,” RGL executive James Hayward said.
“Now that this unlawful practice has been exposed, RGL is launching this claim to recover appropriate redress for all affected businesses.”
Another instance of this occurred when In February, the litigation law firm Harcus Parker initiated the first step in group litigation by sending letters before action to energy companies. The aim is to reclaim undisclosed commissions paid by suppliers to brokers without customers’ knowledge.
Gas and electricity suppliers are alleged to have offered these secret payments to incentivize brokers to sign up customers, disregarding whether the energy is genuinely cheaper for the end user. As a result, customers are unaware of the money being siphoned off to the broker. This practice has particularly affected small- and medium-sized businesses, including care homes, schools, faith groups, charities, sports groups, local authorities, and other community organizations, who have fallen victim to unscrupulous brokers.
The undisclosed commissions have, in some cases, inflated energy bills by as much as 50%, a practice that appears to have evolved over the past two decades.
This legal action comes amid the Government’s significant reduction in subsidies provided under the Energy Bill Relief Scheme, placing a considerable burden on millions of struggling businesses and community organizations.
Damon Parker, senior partner of Harcus Parker, highlighted the substantial impact of high energy bills on care homes, where heating cannot be easily reduced due to the nature of their services.
Can you ask your broker how much they are receiving in commission?
Instead of inquiring directly with your broker about their compensation, we suggest reaching out to your energy suppliers. You can request information from them about the commission and incentives involved in the negotiation of your utility contracts. They should be able to provide you with the relevant details and clarify any queries you may have regarding the terms of your agreements.
For more on this, visit.
Can you claim back secret commission paid to your broker from your energy supplier?
In cases highlighted by Ofgem the broker represents the customer in the bargain seeking the best price but the supplier secretly makes the broker a payment that can be likened to a bribe. Customers can claim back the commission and more.
What are the legal requirements energy brokers must follow?
In the UK, energy brokers are subject to several legal requirements to ensure fair and transparent practices in the energy market. Here are some key regulations they must follow:
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Licensing and Authorization: Energy brokers must be authorized by the Financial Conduct Authority (FCA) or other relevant regulatory bodies to operate legally. This includes adherence to the rules outlined in the FCA Handbook, particularly the Conduct of Business Sourcebook (COBS) and Principles for Businesses.
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Transparency and Disclosure: Brokers are obligated to provide clear and transparent information to their clients. They must disclose any fees, charges, or commissions they receive from energy suppliers. All contract terms, including cancellation policies and cooling-off periods, must be fully disclosed to customers.
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Data Protection and Privacy: Energy brokers must comply with the General Data Protection Regulation (GDPR) and the Data Protection Act 2018. This ensures that clients’ personal and financial information is handled securely and responsibly.
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Treating Customers Fairly (TCF): Brokers are required to follow the TCF principle, which emphasizes the fair treatment of customers. They should provide unbiased advice and recommendations that best suit the customers’ needs.
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Avoiding Misleading Practices: Brokers must not engage in misleading or deceptive practices, such as false advertising, misrepresentation of their services, or pressuring customers into making decisions.
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Conflicts of Interest: Any potential conflicts of interest between the broker and the customer must be disclosed. Brokers should act in the best interests of their clients and avoid situations that may compromise impartiality.
For more on this, visit: https://www.energybrokers.co.uk/news/commercial/secret-commission-of-brokers-in-the-business-energy-sector
What are the advantages of using an energy broker?
Using an energy broker can offer several advantages for businesses and individuals looking to manage their energy needs more effectively. Some of the key benefits include:
- Access to Expertise: Energy brokers are specialists in the energy market. They have in-depth knowledge of the industry, including energy tariffs, market trends, and supplier offerings. Their expertise allows them to provide tailored advice and recommendations based on your specific energy requirements.
- Time and Resource Savings: Sourcing and negotiating energy contracts can be time-consuming and complex. Energy brokers handle all the research, comparison, and negotiation processes on your behalf, saving you valuable time and resources. This enables you to focus on your core business activities.
- Cost Savings: Energy brokers can help you secure more competitive energy deals by leveraging their market knowledge and negotiating skills. By accessing a broader range of energy suppliers and tariffs, they can identify cost-effective options that align with your energy needs, potentially resulting in significant cost savings.
- Transparency and Objectivity: Reputable energy brokers operate on a transparent basis, disclosing any fees or commissions involved in their services. Their primary objective is to find the best energy solutions for your needs, as their success is often tied to the savings they generate for you.
- Access to Multiple Suppliers: Energy brokers work with various energy suppliers, including both big and small providers. This gives you access to a wider range of options beyond what may be available through direct contracts with individual suppliers.
Want to read more?
Well, here is an article from Energy Brokers on TPI fraud, with too much comission being paid in some places.