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East Midlands businesses could be owed billions by rogue energy brokers

East Midlands businesses could be owed billions by rogue energy brokers

Almost 250,000 East Midlands businesses could be eligible to a share of an estimated £7billion, according to figures from Business Energy Claims.

According to the latest figures from the Department of Business Energy and Industrial Strategy (BEIS), the East Midlands is home to 367,400 businesses. The energy regulator, Ofgem, estimates that 67% of all businesses, charities and public bodies buy their energy through a broker.

Business Energy Claims, which recovers money  from hidden commissions paid to unscrupulous energy brokers, believes almost all (94%) these have been mis-led and mis-sold energy contracts – and could be in line to recoup an average of £25,000 each.

As the UK’s leading claims company specialising in business energy compensation claims, Business Energy Claims have discovered a significant number of examples of hidden charges and different forms of mis-selling by energy brokers throughout the industry, in what is being described as the new PPI.

Although it has claims of more than £1million for multiple organisations, the average claim amount for their clients is £25,000. It believes up to 250,000 of the 367,400 business in the East Midlands are likely to be eligible for compensation, meaning that the region could potentially access billions to invest back into growth and job creation opportunities.

Examples of mis-selling include not declaring commission fees, favouring certain suppliers, misrepresenting the number of quotes sought on a company’s behalf and failing to provide the correct advice, such as suggesting long-term or pass-through contracts which weren’t in the best interest of the broker’s client.

Callum Thompson, chief executive of Business Energy Claims, said:

“Energy mis-selling is a huge scandal, and we are only seeing the tip of the iceberg at the moment. It has the potential to be even bigger than the PPI scandal that rocked the banking industry a few years ago.

“There are more than 3,000 energy brokers selling energy to businesses and often these business owners take their word that they are getting the best price, but in many instances that’s simply not true. We are discovering a significant number of cases of undisclosed commission and fees making the energy bills far higher than necessary.  In a time of rising wholesale energy prices this is simply another overhead businesses should not have to accept.”

Both Ofgem and BEIS are actively assessing the impact of energy brokers mis-selling and the potential mis-selling through hidden commissions within business energy contracts, demonstrating a clear cause for concern within the energy sector, with the former introducing remedies for 2022.

In December 2021, BEIS requested consultation on Third Party Intermediaries (also known as Energy Brokers) to understand “the extent to which they cause harm (or risk of harm) to customers and the energy system.”

Mr Thompson continued:

“Government agencies are clearly beginning to take notice of the effects energy brokers are having on the energy industry. With spiralling energy prices squeezing the bottom line, businesses cannot afford to be paying up to 70% of their total energy spend to line the pockets of unscrupulous brokers.

“A vast majority of companies in the East Midlands are small businesses, and many will have had a tough time during the pandemic. We offer our expertise and that of our legal partners, and in instances where we can prove mis-selling we can provide a welcome cash injection to our clients’ businesses.

“It is time that this outrage was addressed, and by holding energy brokers and suppliers to account, we are doing just that.”

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