Mis-selling is becoming more popular and energy cowboys are causing chaos in the industry. It affects businesses both small and large and can be easily done if you’re not an energy expert. Many companies have been mis-sold energy contracts and left out of pocket.
How Can You Spot Mis-Sold Energy Contracts?
Usually, there are 5 main ways which you can identify if a broker has mis-sold you an energy contract. They are:
| No Fees | If you didn’t pay a fee for their service, usually this indicates they took a percentage. |
| No Supplier Contact | You weren’t given access to speak to the supplier directly when negotiating the contract. |
| Limited Options | When an energy broker only gives you a few prices for suppliers when they said they were giving you a thorough search on the market. |
| Long Term Best Offer | The energy broker advertised long term contracts having the best offers. |
| Renew In Advance | Trying to renew the contract well in advance of it starting. |
What Is a TPI?
TPI stands for third party intermediaries. They can also be seen as energy consultants or energy brokers.
How Do Energy Brokers Mis-Sell?
Long Term Contracts
Most cowboy brokers will recommend you agree to a long term contract, even when short term contracts are normally cheaper. This is because if you’re on a longer contract, the more they will earn.
Some of these brokers say the energy market is volatile, so being on a longer contract is better, however, this also increases their commission rates. We know the market is volatile, however, prices do go down as well as up, so sometimes it is better to be on a shorter contract.
Not Giving You The ‘Best Price’
It is rare for a cowboy energy broker to give you the best price. These brokers try to sell you to whichever contract will pay them the fastest and the most upfront. Some of the best contracts come from suppliers who do not pay out big upfront commissions. Suppliers may even cap commissions and restrict durations of contracts, so cowboy brokers rarely present these contracts, leaving you missing out on the best deal.
Renewing With The Same Supplier
An easy way for a cowboy broker to make commission is to sell you back to the same supplier you are currently with. This is because brokers are more likely to earn their commission. If you switch supplier, there is a possibility another broker can undercut the deal. This means there is less risk in an easy contract renewal with the same supplier. This sometimes will be the cheapest deal for you.
What If I Have Supplied Accurate Meter Readings And Still Receive Large Bills?
| Explanation | Rules |
| If you’ve supplied correct readings and your energy supplier has ignored them, you may not need to pay back arrears 12 months and beyond. This also applies if the supplier did not maintain regular meter readings. | According to the Back Billing Code, if a customer provides correct meter readings, however, the supplier rejects them as invalid without investigation, the customer should not be billed for energy used over 12 months ago. |
What If They Switched My Supplier Without Permission?
| Explanation | Rules |
| Has a salesperson asked you to sign something, advising that was the only way to get you a quote? Have you been told to sign something to show they knocked on your door, then had your supplier switched? This is slamming. If so, both your new supplier and existing supplier have a joint responsibility to work this out. You should not need to pay any amount to the new supplier. Even more serious is if they’ve forged your signature. This is a criminal offence. If proven you will get compensation. | Ofgem Licence Condition 25.5 c) ii states that customers are required to understand when entering into a contract. Also, Section 9 of the EnergySure code says customers must understand “they are entering into a contract to transfer their energy supply”. When signing a contract, the word ‘contract’ must be clearly visible. If a customer didn’t understand they were switching supplier, they should then cancel the contract and could be entitled to compensation or money back. |
How Do Brokers Gain Extra Commission?
You may think that energy brokers search the market and give you prices from different suppliers. However, many brokers set their own price, adding commission rates on top of the rates given by the supplier. These commission rates vary, many adding as much as they think they can get away with. In addition, for every unit of energy used, energy brokers will earn a commission from the supplier.
Broker commissions work like this:
Annual Consumption X Amount of commission (pence per kWh) X Number of years contract will run for / 100 = Commissions
(example: 1p X 95,000 kWh X 3 years /100 = £2,850 commission)
Many suppliers will not give you information regarding the amount that is added to your contract by the broker (in pence per kilowatt-hour). They will advise you to speak to the broker, however, they collect the commission for the broker each time your bills are paid.
Can OFGEM or the Energy Ombudsman Help?
OFGEM have no say in regards to mis-selling energy contracts as the industry is unregulated. This has created an influx of new cowboy energy brokers with an alarming increase of mis-selling in the energy sector. The Energy Ombudsman won’t investigate mis-selling, only if you can provide evidence of the broker lying when you were sold your contract.
How Far Back Can My Claim Go?
As a rule, claims can go back up to 6 years.