Business Broker Relationships

My business has paid hundreds of thousands of pounds on its current energy contract.

Ask Our Solicitors

Associate Solicitor and Head of Business Energy Claims
Peter Joyce

Q

My business has paid hundreds of thousands of pounds on its current energy contract.

We’ve always used the same energy broker and I have even recommended them to other businesses over the years, so I know them quite well. Will my broker be sued if I make a claim? Will my broker find out? How would I have to source my new contracts going forward?

A

Thank you for your questions. First of all, it’s important to know that it is a very common situation for independent business owners to have an ongoing positive relationship with their business brokers.

Reports by OFGEM & the Department for Business, Energy & Industrial Strategy estimate that over two thirds of UK small businesses have used the services of an energy broker. It’s not surprising that you used the same broker for many years, or that you are friendly with them.

The vast majority of businesses that fell prey to this malpractice did so unknowingly. It can come as a shock to business owners when they learnt that brokers were not fully transparent about the nature of their earnings, which I can completely sympathise with.

Peter Joyce

Secondly, while you have a right to sue both the energy supplier & broker, you maintain the right to leave the broker out of your claim. It can, however, be of great benefit to your claim if you allow your Solicitor to request documents from them. While it will not affect the value of the claim, it may positively impact the chances of settlement and time in which your claim might be settled.

It’s worth mentioning that your energy supplier may seek to recover (at least partially), anything owed to you from the broker. In this case, the action would target the broker company and not the individual.

With this in mind, it is therefore highly likely that your broker will find out, regardless of how you choose to pursue your claim. Furthermore, some suppliers will ask your broker for an account of dealings with you.

While we understand that many business owners may have an existing relationship with their broker, it is hard to ignore just how much these commissions cost each business they affected.

In one example, we found that on a 36-month contract where a client paid £155,000 for energy, over £37,000 had been paid in commissions to the broker, without their knowledge.

As of October 2022, for micro-businesses at least, disclosure of commission is now mandatory within each contract. Therefore, if you choose to use a broker rather than source a contract directly, you will be able to do this in full knowledge of how much the broker will be earning at your expense.

These changes mean going forward this type of practice by brokers will be less common & instead more impartial & transparent, helping business owners without hidden costs.

I would advise you to seek the help of a Solicitor, who can analyse your contract & assist you with making a claim.

Due to the value of these commissions, at a time where many businesses are struggling, I think it would be in your best interests to at least explore legal options.

Feel free to refer to our FAQs page or see below for additional links to help you with your claim.

Helpful Links

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