Small businesses urge Ofgem to tackle “unscrupulous” energy brokers over “hidden fees”

Business groups claim that these undisclosed commissions have led to higher energy bills

A coalition representing over one million small businesses is pressing energy regulator Ofgem to address concerns about “hidden commission fees” imposed by energy brokers.

The trade groups are advocating for increased transparency and disclosure from gas and electricity suppliers regarding the payments made to intermediaries who negotiate deals on their behalf.

The business associations argue that these “undisclosed commissions” have contributed to inflated energy bills, exacerbating the financial challenges the small business sector faces.

In a joint letter to Ofgem, chief executives from organisations, including UKHospitality, Care England, the British Retail Consortium, the Association of Convenience Stores and others, have united their voices to emphasise the urgency of the situation.

In their statement, the group, organised by the energy consultancy Box Power CIC, said: “We have the support of some of the biggest voices representing the UK’s most hard-hit sectors. If you continue to fail the business community by allowing this exploitation to continue, we will raise this direct with the government.”

The letter states: “We can see no justification for allowing so many businesses and organisations operating in the sectors among the worst hit by the cost of living crisis including social care, hospitality and retail among others to be exploited from this basic lack of fee disclosure.

“We are now calling for you to immediately offer guidance to suppliers that you wish this to be considered as good practice with amended legislation to follow to ensure that it happens at last.”

Ofgem has previously expressed concern about some suppliers’ behaviour in the non-domestic market and has initiated compliance reviews and a broader non-domestic market review.

However, the small business coalition asserts that the situation requires immediate attention and resolution.

The group said: “We do not agree that larger businesses are able to look after their own interests, that just because this is a long-standing arrangement that it should continue or that Ofgem is best placed looking at issues affecting microbusinesses only.

“A broker was easily able to add nearly £12,000 in commission onto a £49,000 gas contract for a single care home. This example shows how unscrupulous brokers are taking advantage of businesses that can ill-afford it, ultimately loading costs onto the customer who include some of the most vulnerable people in the UK.

“Many businesses and organisations have limited subject matter knowledge as they may only buy their energy every other year when needed.”

An Energy UK spokesperson told ELN: “Energy UK has long supported closer regulation of third-party intermediaries, like energy brokers, operating in the sector.”

An Ofgem spokesperson told ELN: “We have listened loud and clear to calls to protect businesses of all sizes from sharp practice by energy brokers. We acknowledge their strong arguments about creating a level playing field with protections we’ve put in place for microbusinesses.

“We have finalised the most detailed ever review of the national non-domestic energy market, covering the private and public and third sectors.

“We are setting out a comprehensive package this week tackling poor behaviour by energy suppliers toward exactly the customers who underpin our economy and society. This will include immediate actions we can take within our existing rules and where we might need stronger powers.”

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