Accessing a safe and efficient energy system has never been more important for businesses that are fighting for survival.
So I was distressed to receive evidence that at least one Yorkshire business appears to have been targeted by unscrupulous energy brokers.
The owner of a North Yorkshire hotel, who has asked to remain anonymous, has welcomed guests to her business for nine years.
Like many business owners, she was approached by an energy broker within the last year and offered a deal.
However, according to the woman, the level of commission charged was never declared. The hotel owner said she was enraged after discovering that most of her energy bill each month was going to the broker.
She said: “I was absolutely astonished when I realised that two thirds of my energy bill was nothing to do with keeping the heating on and my hotel running, but instead going directly into the pocket of the broker who sold me my energy deal.
“Hotels like mine have been hit hard enough by coronavirus and the difficult trading conditions we now find ourselves in.”
Callum Thompson, director of Business Energy Claims, which is supporting a legal claim being made by the woman, believes that mis-sold energy bills could be “the new PPI” scandal.
UK charities, the public sector and businesses spend roughly £25bn combined a year on gas and electricity, according to Business Energy Claims.
“Deregulation in 2001 allowed customers to shop around, but it also meant energy brokers could charge huge commissions – many of which are not declared to their clients,” the firm said.
The regulator shares Mr Thompson’s concerns. Ofgem has promised to crack down on brokers who take as much as 50 per cent of a business’s energy bill in commission to set them up with a supplier.
The energy watchdog said it would “tackle unscrupulous energy brokers” to help millions of small businesses get better deals.
It said that while many of the two-thirds of small businesses which use a broker to get a deal benefit from the arrangement, a large number are being ripped off.
“In too many cases, micro businesses are hampered by a lack of transparency when using brokerage services and end up being locked into poor-value deals because they are not fully aware of what they are signing up to,” Ofgem said.
Some businesses are paying thousands of pounds more than they need to in broker commission charges, the watchdog said.
It cited the example of a golf club whose energy deal contained a “hidden” commission of 50 per cent of its energy bill. The golf club is estimated to owe £24,000 in these hidden fees.
Despite promising to search the entire market for a good deal, the unnamed golf club’s broker only gave its customer one option at the end of the process.
“Providing greater transparency and tackling unscrupulous brokers will help micro businesses get a better, fairer energy deal,” said Philippa Pickford, Ofgem’s director of future retail markets, consumers and markets.
“This is more important than ever as micro businesses emerge from the challenges posed by the Covid-19 pandemic.
“These proposals are part of Ofgem’s wider work to improve the energy retail market through smart metering, extra support for vulnerable customers, plus faster and more reliable switching.”
The proposals include plans to introduce a dispute resolution service to mediate between brokers and unhappy customers. It will also introduce a two-week cooling-off period for businesses which have signed up to a new supplier, in line with the time that households have to reconsider.
These cowboy energy brokers must not be allowed to exploit honest business people who are working around the clock to help the UK’s economy fight back from the pandemic.
A public list of the worst offenders, accompanied by hefty fines, would concentrate their minds and act as a powerful deterrent.
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