The emerging scandal of hidden commission in the business energy sector

Alex Jakubowski, a Partner with national law firm Clarke Willmott LLP
Alex Jakubowski, a Partner with national law firm Clarke Willmott LLP

Businesses are now being urged to look into their deals and think about whether they know how their broker gets paid. The law firm says millions of pounds in compensation could be due.
“Customers should ask themselves what they know about commission payments and whether they have given their informed consent, even those customers who have perhaps been told the service is free or that the supplier pays the commission.” said Alex.

“Your energy broker is your agent and owes you a duty of utmost good faith, which means avoiding any conflict of interest. However, where your broker is introducing you to a contract with a supplier who is going to pay a commission, that’s a clear conflict of interest.

“The broker must notify you of the payment and secure your consent. It’s not enough for them to mention in the small print that they may or even will receive a payment from the supplier. They have to give you the information that you need in order to give your informed consent and if they don’t that’s called a secret commission or half-secret commission, also known as a bribe.

“Where your agent has made an undisclosed profit, you are entitled to an account of that profit. In the case of a broker’s commission, you are entitled to claim the entire amount of that commission.
“And it’s not only the brokers who are to blame. Suppliers have fuelled these practices with up front commission payments and generally leave it to the brokers to explain their commission. However, that’s not good enough. The supplier has a responsibility to check that you have consented or pay the consequences.
“In the equation where the commission is a bribe, the supplier is the briber. So, if you didn’t consent to the commission your broker received, you will be entitled to claim it from your supplier as well as your broker.
“We believe that a vast amount of undisclosed commission has been paid and received at a cost to the customer. If you have used an energy broker you should double check how that broker has been paid and whether you gave your informed consent, if you didn’t then you may have a claim.”

Clarke Willmott has compiled a list of questions for businesses to consider when thinking about making a claim.

Do you know:

  • the nature of the broker’s relationship with the supplier;
  • the amount of the commission;
  • how it is calculated;
  • the commission rate;
  • that the broker has an interest in you switching from your existing contract;
  • that the broker has an interest you entering into a longer contract;
  • that you may be able to achieve a better price directly or through another broker who might charge a lower commission;
  • that the supplier adds the amount of the commission into your unit charge and charges it penny for penny straight back to you.

If you don’t know these things, then informed consent hasn’t been given and the commission amounts to a bribe.

Businesses that have any queries or would like to discuss a potential claim can contact Alex Jakubowski on 0345 209 1385




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