Rogue Energy Brokers are Cheating Small Businesses Out of Billions
When energy regulator Ofgem promised to crack down on unscrupulous energy brokers, they did so after the scale of the problem was set out in black and white.
Documents submitted to them found brokers making as much as £2bn a year from business energy mis-selling.
This shocking figure highlights an issue that has gone beyond a minor problem and developed into an industry-wide scandal.
But how has it got to this?
Locked into bad deals
Companies of every size and type, across a range of sectors, have been victim to the practice of mis-selling, with poor value contracts one of the ways they’ve been affected.
This type of mis-selling sees brokers promise good value for money deals but in fact choose from a select few energy suppliers who offer the best commission rates to the brokers.
Unbeknown to the client, they are not getting the best deal available on the market at the time, with this information masked to avoid the client finding out the true cost of their energy.
To compound this, the deals are often long-term and lock small businesses into bad deals which results in them paying more than they need to.
Is the industry regulated effectively?
For an industry which generates an estimated £25bn a year, the small business energy market is surprisingly under-regulated, with Ofgem estimating that approximately half of that figure relates to contracts sold by brokers.
With an industry estimate that £2.25bn of that is commissions paid to brokers, the size of the mis-selling is impossible to ignore but easy to carry out.
Setting up as a broker isn’t difficult to do, with low cost involved, minimal regulation and potentially big returns.
Pressure to reform
There is continued pressure for the business energy selling sector to be more heavily regulated, to weed out the unscrupulous brokers and ensure the fairest possible method of arranging business energy deals.
If this doesn’t happen, the number of business energy claims will continue to rise with the potential for a similar trend to that of the PPI scandal which affected millions of people.
Share this articleBack to News