Written by Damon Parker, Senior Partner Harcus Parker
Small and independent businesses joining a group action could receive thousands in compensation from energy companies in the wake of a secret commissions scandal.
Small and medium-sized enterprises (SMEs) have been under considerable pressure over the past several years. In addition to the impact of the pandemic, the rising cost of living and continued utility price hikes have created a perfect storm.
Despite SMEs being the backbone of the UK economy, 2023 has seen record closures, with over 100,000 forced to shut their doors.
SME owners will be aware that energy costs have risen because of geopolitical factors such as Russia’s invasion of Ukraine. What they may not know is that their energy broker may have also taken a secret commission in exchange for fixing their energy costs at a higher rate, costing their business thousands.
How are SMEs affected by the secret commissions scandal?
In 2021, the UK’s energy regulator Ofgem revealed that brokers or third-party introducers (TPIs) may have been charging businesses thousands of pounds in energy commissions without customers’ knowledge.
Although the domestic energy market is heavily regulated, the commercial energy sector remains largely unregulated. It is relatively complicated, and SMEs are often attracted by the idea of assistance from a broker. In some cases, however, brokers have caused customers to enter unfavourable contracts, to their advantage and that of the energy supplier. Some (or all) of the value of the uplift in the unit price for the duration of the contract has been paid to the broker by the supplier.
Across the country, rogue brokers have targeted SMEs of all sizes. However, because the additional cost was hidden within organisations’ energy rates, many were unaware that they were overpaying.
With SMEs already feeling the pinch and with winter fast approaching, now is the time to act and discover whether improper broker practices took place and whether a claim can be made.
Next steps for SMEs
Businesses are well within their rights to make a claim seeking to recover costs. They must first provide details of the energy contracts they entered into over the last few years including the supplier’s name, broker used, and the contract duration. From these details, the Harcus Parker team will verify if a claim is valid. There is no up-front cost as the team will only take a percentage of any damages awarded to the claimants (no win, no fee).
Once a verified claim has been identified, Harcus Parker will collate the provided information and make representations to the defendant and to the Court. A portion of the Harcus Parker fee will also be donated to a relevant charitable organisation.
Numerous businesses across sectors in England and Wales have already joined the claim – alongside thousands of organisations in other sectors. New claimants can start their journey here.