The Government is set to announce that almost every business in the
UK will get free support to claim compensation for secret broker fees hidden in their energy bills. Following stories in i highlighting the practice of energy broker fees being concealed within bills , a new scheme is set to be launched that could help businesses claim up to £10,000 in compensation without having to go through the courts. Business minister Amanda Solloway will announce the move as part of Government and Ofgem changes to tackle “cowboy practices” such as hidden broker fees, inaccurate energy bills, and pressurising sales tactics for energy contracts. While micro-businesses – firms with less than 10 employees and sales under £1.8m – can already go to the Energy Ombudsman for help with energy contract disputes, the Government will extend access to companies with fewer than 50 employees. This means 99 per cent of all private businesses and charitable organisations will have access to the free resolutions service. In an article written for i , Ms Solloway said: “Thanks to the i newspaper and others, we’ve heard how these astronomical bills are threatening hardworking businesses with fees they should not have to face. There is absolutely no excuse.” However, the policy will not apply to businesses who have historic claims against their energy suppliers or for those who have claims of more than £10,000. Businesses with 10 to 49 employees will only be able to use the scheme to reclaim broker fees that are hidden in energy deals agreed after the new rules come into force, which is expected in the summer. If a general
election is called in the next few months, the expansion of the scheme could be delayed. 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 to credit or amend customer accounts. The move, to be announced on Friday, will also enable businesses and other organisations to settle disputes with their energy broker via the ombudsman without the need for costly legal proceedings. The Government claims this is “a first step” in a crackdown on rogue energy brokers targeting small organisations with thousands of pounds in hidden fees. Ms Solloway added: “We take pride in our
British businesses, and that’s why this government will always stand by entrepreneurs. “All businesses deserve to get a good service from their energy supplier – and today’s changes will empower small businesses with free redress support via the ombudsman. Read Next Energy customers set for payouts worth billions in scandal 'bigger than PPI' “This is just the beginning. Rip-off energy brokers have no place in our market, and we will act to raise standards for customers.” Energy brokers are used to help small businesses and organisations, like charities or schools, find the best energy deal for their needs, which larger businesses often manage in-house. This can leave smaller organisations vulnerable to unfair fees, with only the courts as a route to redress. Ed Dodman, director and chief ombudsman at the Energy Ombudsman, said: “We’re very pleased with this announcement – we believe that businesses should have the same access to support as consumers and the addition of small businesses is very much welcomed. “It now means that they have access to a free, impartial and independent body to help them resolve disputes with their energy supplier. By extending the services to cover all small businesses, it fills an existing protection gap and means organisations who may have more limited resources will be able to access the support they need.” Alongside the Government announcement, Ofgem are also setting out plans to improve energy services for businesses and other non-domestic customers, including a new requirement for brokers to provide full transparency on fees within contracts. It will also change the rules so that energy suppliers can only work with brokers who are part of a redress scheme when securing small business contracts. Ofgem also wants customers to be signposted to other routes they can use to resolve disputes beyond the ombudsman, such as the Utilities Intermediaries Association, the trade body for third-party intermediaries in the business energy sector. ‘End these rip-off fees, or face the consequences’ minister tells energy suppliers Business minister Amanda Solloway tells i readers the government is forcing energy brokers to ‘come clean’ on their fees Since the days of the industrial revolution, British entrepreneurs have been the powerhouse behind our trademark innovation and growth. It is no surprise then that we take pride in our homegrown industries. From local shops and restaurants to big household names – many wouldn’t exist without the movers and shakers who kick-start their own venture. So when someone tries to take advantage of our small business owners, they should know they are picking the wrong battle. I’ve heard from businesses across the country of appalling behaviour from some rip-off energy brokers unfairly profiteering at their expense. Brokers are there to help small businesses and organisations, like charities, find the best energy deal for their needs, which larger companies can often manage in-house. But instead of offering a helping hand, some brokers target these small firms with hidden commission fees, costing up to tens of thousands of pounds in unnecessary charges. Thanks to i and others, we’ve heard how these astronomical bills are threatening hardworking businesses with fees they should not have to face. There is absolutely no excuse. We will always back British businesses. When Putin’s illegal invasion of
Ukraine sent energy prices soaring, we stepped in with a £40bn package for both families and businesses. And this week, small businesses received another boost as further tax cuts came into force. Now, together with Ofgem, we are standing up for them again. Today we’ve expanded the Energy Ombudsman so from later this year, small businesses with fewer than 50 employees will be able to get free support on issues with their energy bills. Alongside Ofgem’s reforms, this means small businesses will also be able to settle future disputes with their energy broker for free via the ombudsman or another service. It will give business owners the trusted support they need to challenge unfair treatment, without the burden of costly legal proceedings. As with any service, organisations should be able to go through an energy broker with full knowledge of what they are signing up to. And thanks to new rules from the regulator today, these brokers will now have to come clean on their fees, helping customers access the competitive choice of energy contracts they deserve. Energy suppliers will also be required to only work with brokers that are part of a redress scheme, so customers can always access free and fair support with any issues. This is a first step for businesses. But let this be a warning: energy brokers ripping off their customers have no place in our market. We will soon set out our plans to crack down on this rogue behaviour and introduce new rules to raise standards for customers. So my message to them is act now and end these rip-off fees, or face the consequences to come. With inflation down, 2024 is a turning point and the year
Britain bounces back. Now is the time for British businesses to thrive and grow – and we are right behind them. Amanda Solloway is the Energy Affordability Minister and MP for Derby North It is widely believed that millions of small businesses have been affected by secretive energy broker fees added to their bills without any transparency over how much of the energy costs go to their broker rather than to pay for the gas and electricity usage. Despite the introduction of the new Ofgem regulations and the opening of a free resolution service through the ombudsman to all small firms, those companies with historic claims stretching back as far as 2000 will not benefit and will have to continue with their own litigation against the energy firms. In March, i revealed that energy firms could be forced to pay out billions to customers after a small business won a landmark legal case over hidden fees in bills. The case could lead to hundreds of thousands of micro-businesses seeking compensation over energy deal broker fees concealed within their own bills . Queenie’s Casino Slots, based in County Durham, recouped £14,000 from French power giant Engie after a judge ruled an energy broker hid additional fees in the business’s bills. While one claims company boss welcomed the Government opening the ombudsman service to almost all companies and tighter Ofgem regulations, he added that it will come too late for hundreds of thousands of firms whose claims against secret energy broker charges predate the new policy. Callum Thompson, managing director at Business Energy Claims, said: “Whilst it is encouraging that the Government has acknowledged the extent of the issue of misconduct in the non-domestic energy market, it is important to note that this has been an endemic problem for many years. “So whilst we do welcome alternative forms of redress imposed by the Government, there has been years of sharp practice that have cost businesses billions of pounds that will predate the newly proposed scheme.” Victoria Myers, a lawyer at Energy Solicitors who represented Queenie’s Casion slots, added: “We are pleased to see that the government and the Energy Ombudsman have acknowledged and respected the judgement in our recent groundbreaking court ruling, brought to light by i , which rules in favour of the small entertainments business we represented. “We are supporting many other businesses right across the country amid a growing scandal which highlights how energy brokers and energy suppliers frequently omit to disclose broker commissions made on contracts, which are then unknowingly paid by businesses and other organisations affected.” One downside for businesses of the multi-billion pound claims against energy suppliers could be that all non-domestic bills are increased to cover the costs of losing so many court cases, both from individual firms and group actions from the likes of law firm Harcus Parker. Legal and energy experts say the scandal could potentially be bigger than the mis-selling of PPI (payment protection insurance) from 1990 to 2010. Last June, the Utilities Intermediaries Association told i that if the energy companies are told by courts to compensate business customers that the costs will be passed on to other customers. “It will not cost suppliers or their shareholders billions, because what will happen is that it will be smeared across customer accounts to cover any losses,” a spokeswoman for the UIS said. “In plain English, we will all suffer the consequences.” How the new scheme will work There are 5.5 million small businesses in the UK, each with from ten to 49 employees. While they will be able to go to the ombudsman for claims of up to £10,000 against energy suppliers, they can only do so for deals agreed with brokers after the scheme is expanded to them, which is likely to be this summer if no general election is called before then. Due to the Government’s move not being retrospective legislation, losses small firms accrued due to the scandal will not be able to be considered by the ombudsman. The UK’s 5.2 million micro-businesses – those companies with up to ten employees – have always been able to access the free resolution service from the ombudsman but only for claims up to £10,000. So, while the new regulations will apply to 99 per cent of all firms, only businesses with claims of up to £10,000 will benefit from the move to expand the ombudsman scheme. What to do if you still can’t benefit from the ombudsman scheme So, what do you do if you have an historic claim as a small business or a claim of more than £10,000 as a micro business? Before approaching a lawyer or energy claims firm, of which many can be found on the web, write to your business energy supplier to gather the information you need. Ask your supplier to provide detail of all the broker fees you have paid as part of your energy tariff since you agreed the deal. For example, if your company has been with the same supplier since 2000, then ask how much you have paid in broker fees since then. You should also ask your supplier what its profit has been during the course of your deal or deals with them. Finally, make clear to your energy supplier that you are prepared to take legal action should they refuse to refund your commission fees. If you cannot agree a settlement with your supplier, then consider adding your name to a group action by a legal firm. You could also, at this point, also take your action to a business energy claims company. Also be aware that a claim is not guaranteed to be successful and may cost thousands in fees if you cannot agree a no-win-no-fee deal. What you will need to prove to a court In order to convince a court or the ombudsman of your case you will be required to show all of the following: If a claimant cannot establish any of these points any claim may be rejected by a court.