Energy brokers to be required to disclose commissions

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Do business energy brokers disclose commissions

With a growing number of hidden business energy commission scandals coming to light, brokers are feeling the pressure to be more transparent. Energy is one of the main costs faced by businesses across all sectors. Finding the right business energy deal can significantly improve the stability of an organization, but recent revelations have uncovered that many businesses are paying too much for their gas and electricity, due to undisclosed commissions.

Now new rules are in the process of being made to protect SMEs should consider after many instances of overcharging by energy brokers were discovered. Businesses are seeking out support from legal experts to help them reclaim the money they’re owed, and the regulators at Ofgem are in the process of developing new guidelines to prevent these cases from occurring.

We’re going to take a closer look at this scandal, asking do business energy brokers disclose commissions, and are they charging their customers too much? Let’s investigate.

Do business energy brokers disclose commissions?

Business energy deals are far less regulated than domestic deals, which means that brokers aren’t required to operate with the same level of transparency. Within domestic energy contracts, all costs must be clarified and explained, but this still isn’t the case when it comes to small businesses. Many brokers will still choose to be clear with their customers, but they aren’t required to, and those less than reputable brokers will take advantage of this and include hidden costs which are more difficult to spot.

In fact, Ofgem reports that brokers may have overcharged the likes of charities, church groups, and care homes by more than £2 billion by hiding commission fees, and locking customers into poor value, long-term contracts. Microbusinesses spend around £25 billion on energy bills every year, and two-thirds of this is routed through energy brokers, with terms completely controlled by the latter.

Do Business Energy Brokers disclose commissionsLast year, Ofgem launched an investigation into energy brokers, and found many cases of inflated hidden commission, with one instance involving commission that accounted for 50% of the business’s total energy contract – or £24,000. This fee was not known to the business.

In order to tackle the poor practices of unethical energy brokers, Ofgem is in the process of making it necessary for brokers to reveal how much commission they stand to make off any business energy deal, creating a more transparent relationship from the outset. Businesses will also have a 14-day period to back out of any energy contract they sign.

As the level of extortionate commission becomes clearer, a growing number of businesses are turning to legal experts like Winn Solicitors to help them reclaim the money they shouldn’t have paid.

What does an energy broker do?

What does an Energy Broker doWhile these unethical energy brokers are getting a lot of attention, it’s important to remember that many energy brokers operate fairly and transparently with their customers. They’re there to act as the middle man between businesses and energy suppliers, performing roles similar to other intermediary jobs like real estate brokers or stockbrokers.

It is the job of the energy broker to lower the bottom line cost of energy between consumers and producers, helping to minimize day-to-day operational expenditures.

A more transparent relationship between brokers, suppliers, and customers helps to prevent the bad practices from becoming normalized, supporting microbusinesses for whom every penny counts. The right energy broker will work with their business customers to get them the very best price for their gas and electricity, being honest about any commission costs included in the price.

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