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Unregulated Energy Brokers Take £2 Billion from Small Businesses Every Year

Unregulated Energy Brokers Take £2 Billion from Small Businesses Every Year

Care homes, churches, and charities have fallen prey to some unregulated energy brokers, as they have been made to pay an excess of £2 billion in long-term bad contracts on electricity and gas. Some of them are now filling claims for legal settlements against their brokers

And some claims management companies are helping the victims recover their money from the brokers.

Individual firms are seeking payouts of up to £1m, according to one claims management firm that is seeking legal settlements for small businesses against their brokers.

According to a recent report, many of these rogue energy brokers are offering their services at no cost to their clients. However, they are offering poor value deals they gained from suppliers who offer the most profitable and enticing terms to the brokers. They promise the clients the best energy deals, but in the real sense, the main gainers here are the energy brokers.

This inflated supply deals can yield billions for these unscrupulous brokers who go about deceiving their clients with supposedly lucrative offers while gaining considerably more from the suppliers.

According to the founder of Business Energy Claims (BEC), Callum Thompson, about 90 percent of micro-businesses using energy brokers may have been a victim of the mis-selling activities of the brokers in one way or the other.

Energy suppliers aware of the irregular deals

These unscrupulous activities have been ongoing for a long time because they are not properly regulated, which could have provided protection. Thompson further reiterated that the energy suppliers were complicit in the brokers’ activities because they consented to the irregular energy bills by the brokers.

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He said that if the brokers are going to face the law for their bad dealings, the suppliers who have a role to play should also be made to face the law. Energy brokers in the United Kingdom have risen to unprecedented levels, with more than 3000 brokers currently engaging in one form of deal or the other. The reason for this high number is because it’s relatively cheap to establish a brokerage business because of the poor regulation and low entry fee.

Brokers make more than £2 billion as commissions yearly

The regulator revealed that over £25 billion are spent by public bodies, charities, and businesses to cover their energy bills yearly, and 50% of these deals are made through energy brokers. With this figure, Thomson said that the brokers are receiving about £2.5 billion in commission from their deals yearly.

He said the regulator is completely aware of this heavy mis-selling in the industry, but something should be done to fix the issue.

According to the report, there are cases of unnamed firms winning back undisclosed commissions, including £3,200 for a church, £8,200 for charity, and £10,000 for a care home. There is another firm that is owed more than £500,000 in undisclosed commission.

Investigation on brokers underway

Thompson said his firm is gathering reports that will serve as evidence for the regulator to use against such unregulated and unscrupulous brokers.

They have been trying to cut off the activities of these brokers since 2014 because regulation of their dealings has been far from standard. It revived its investigation plans on the brokers two years ago. Relatedly, Citizens Advice has hailed the development to investigate the brokers, saying that it was surprised why such investigation is taking too long.

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Ali Raza

A journalist, with experience in web journalism and marketing. Ali holds a master degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.