London-based litigation company RGL Management has launched a group legal action, Business Energy Litigation (BELit), on behalf of UK companies that were allegedly overcharged for electricity and gas through secret commission payments to brokers.
The legal claim will seek to recover significant amounts of compensation for businesses, most of which were not aware they were targeted by “unlawful, hidden commission payments” to brokers.
The total value of the RGL Group claim is expected to be in excess of £500 million.
The group claim comes at a time when businesses have suffered an extended period of high energy prices, with around seven-in-ten of all UK businesses believed to be eligible to join the claim.
Signups have already begun, with over four thousand UK businesses expressing a wish to join, the RGL has said.
Analysis indicates the claims average £60,000 per company and could amount to hundreds of thousands of pounds for high energy usage businesses.
James Hayward, Chief Executive Officer of RGL Management, said: “For many years, energy companies acted with impunity to obscure hidden payments to brokers, artificially inflating costs for UK businesses.
“Now that this unlawful practice has been exposed, RGL is bringing this action to recover appropriate redress for all affected businesses, seeking damages in the hundreds of millions of pounds.
“We believe around 70% of UK businesses pay for their energy via a broker or other intermediary but many are not aware that they are eligible for compensation.”
In a bid to enhance transparency of broker costs and empower business owners to make informed decisions, Ofgem has rolled out a new requirement for energy suppliers.
As of October 2022, suppliers are mandated to disclose in clear terms, in the contracts of microbusiness customers, any fees paid to third parties.
This move aims to enable small businesses to make fully-informed choices about their energy contracts.
Additionally, Ofgem has introduced new licence conditions that limit suppliers to working with brokers accredited to an Alternative Resolution Scheme when securing microbusiness contracts.
Meanwhile, Ofgem is conducting a review into the non-domestic energy market.
ELN has reached out to Ofgem for comment – the regulator declined to comment on active legal proceedings.
