Getting prices from lots of different brokers is a “poor way” of going around to find a good energy deal in the market.
That’s according to Mark Alston, Director at ENER-G Procurement, who also believes a lot of the time businesses “jump straight to a price discussion”.
He suggests firms should regard it as a “professional service”, try to establish a relationship with one broker as if they were selecting a business partner. Mr Alston said: “If you’re getting lots of brokers asking for prices at the same time from all the suppliers, they will give them a standard price and let them fight among themselves as to how much commission they need to add to it.”
He said that does not mean the client is getting a good deal at all: “What it means is that they’ve ended up with a broker that’s either prepared to present the offer in a slightly misleading way to make it look like they’ve got the cheapest or they’re getting a broker with a genuinely very low fee but that may mean they’re actually not very good and aren’t delivering a good service to the customer.”
Mr Alston suggests separating the two decisions: “Which broker do I want to work with? Listen to how the broker would approach your business, understand their fee structure and negotiate the fee.
“Then let that broker go to the market knowing that they have sole power to negotiate the best deal possible. This ensures the suppliers know the only way they can win the client’s business is by negotiating hard with that one broker.”
However he did warn of so-called “rogue” brokers in the industry who are looking for a “quick hit”: “They are brokers who are really just focused on feeding their sales machine, not in providing long term service and value to the customer.”
Mr Alston suggests businesses should just ask the “normal questions” about the service being offered and if they don’t know how much commission a broker is making, “the simple thing to do is just ask the broker – and don’t be shy of going to the supplier to verify it.”
On Ofgem’s TPI Code of Conduct, Mr Alston added it is a “good thing” but he has some concerns. “It looks like they’re going to create a very cumbersome bureaucracy around it. I do worry the outcome will be a lot of red tape and costs to the industry”, he said.
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