Ofgem has promised to crack down on brokers who take as much as 50% in commission when setting up businesses with a new energy supplier, as reported by Insider. The energy watchdog unveiled the plans on Wednesday, which will regulate the sector by tackling “unscrupulous energy brokers” and help millions of small businesses get better deals. So, how exactly will these changes benefit your business?
Ofgem’s statement acknowledged that many micro-businesses that use brokers do not benefit from the arrangement. In fact, some businesses are paying thousands of pounds more than they need to in broker commission charges, the watchdog said.
“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
It cited an example of a golf club whose energy deal contained a “hidden” commission of 50% of its energy bill, which led to them owing £24,000 in these hidden fees. Despite promising to search the entire market for a good deal, their broker only gave them one option at the end of the process.
Unfortunately, we hear of incidents like this every day—and not just from small businesses, but from much larger corporations too. We welcome the changes, though we hope to see the plans extended to big companies in the future.
The new plans aim to provide greater transparency, helping small businesses to get fairer deals. Around 1.5 million of Britain’s 5.6 million micro-businesses are expected to benefit from Ofgem’s new proposals—which is especially pertinent right now, as micro-businesses continue to struggle with 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. It will also introduce a two-week cooling-off period for businesses that have signed up to a new supplier—and, crucially, bills and contracts will have to include information on how much commission is going to the brokers.
These new suggestions will now go into consultation.
The good news is, if you think you’ve been mis-led by an energy broker, the Boxfish team can help to release you from mid-sold contracts and claim back hidden fees—just like we did for our client, William Purves, saving them over £100k. What’s more, we are fully transparent about our fees, which are always agreed with you up front. There are no hidden fees or commissions, ever.
It’s time to kick those unscrupulous energy brokers into touch and work with a company you can trust. Give us a call on on 0141 226 8525 or fill in our online contact form below—and we’ll even kickstart the process with a free, no-obligation review of your utility costs.