The UK’s business energy market, valued at £25 billion annually, has long been vulnerable to broker misconduct.
For decades, energy brokers leveraged their intermediary roles to mislead companies about contract terms, often concealing commissions that inflated energy costs.
Many small and medium-sized enterprises (SMEs) unknowingly overpaid for energy due to concealed pricing structures and a lack of regulatory oversight.
Ofgem’s findings revealed that 90-95% of microbusinesses using brokers had been mis-sold energy contracts, resulting in billions of pounds lost annually.
Average Claim Value: The average business energy claim exceeds £25,000+, highlighting the significant impact of mis-sold contracts on company finances.
Broker Commission Markups: Energy brokers have been reported to inflate commissions by up to 40% of a business's annual energy cost, often without disclosure to clients.
Prolific Mis-selling: Approximately 8 in 10 businesses that used a third-party energy broker reported being misled or overcharged in their contracts.
Non-Disclosure of Fees: It was discovered that brokers frequently failed to disclose fees, leaving businesses unaware of thousands in hidden costs.
Collective Overpayment: Businesses have overpaid a staggering £2.4 billion across the UK due to energy mis-selling practices over the past decade.
Dispute Success Rates: Over 70% of claims brought against brokers for energy mis-selling through adjudication or ombudsman services have resulted in settlements in favor of businesses.
Microbusiness Vulnerability: Microbusinesses and SMEs are more likely to fall victim to opaque broker practices, as 63% of such entities rely on third-party brokers for contract negotiations.
Historical Claim Possibilities: Claims can often cover contracts signed over the past 6 to 10 years, allowing businesses to recover substantial sums from older agreements.
Energy Intensity: High-energy-use sectors such as manufacturing, food production, and hospitality are particularly impacted, with claims often reaching upwards of £100,000 in these industries.+
Ofgem Reforms: New Ofgem guidelines in 2024 ensure brokers must fully disclose commissions and avoid misleading practices, significantly increasing opportunities for businesses to identify and rectify unfair contracts
These underscore the potential financial and operational benefits of pursuing a business energy claim and demonstrates the pervasive nature of mis-selling in the UK energy market.
You can find out more by sector here.
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