Energy brokers dismiss £2bn lawsuit as ‘utter fantasy’

Energy Consultants Association calls class action lawsuit by 5,000 small businesses ‘a PR attempt’ and that compensation claimed bears no relation to reality

Energy brokers have dismissed the £2bn lawsuit by thousands of small businesses that they have been overcharged as “utter fantasy”.

So far, 5,000 businesses have joined the class action lawsuit being steered by law firm Harcus Parker.

The campaigning law firm claims energy giants paid brokers “secret commissions” that pumped up energy bills for thousands of unwitting small businesses.

Thousands of firms join £2bn lawsuit against energy giantsEnergy giants paying brokers secret commissions pumped up energy bills for thousands of unwitting small businesses, claims campaigning law firm

“The numbers are utter fantasy – and driven to generate interest again for PR,” said The Energy Consultants Association (ECA), given that most microbusiness energy bills are less than £10,000 each year. “The billions promised are rather sensationalist.”

The ECA called Harcus Parker’s class action lawsuit a “PR attempt”.

The ECA points to the recent case of Oxford-based pub The Dark Blue Pig suing ENGIE Power for £9,000 for overcharged energy bills, which ended up costing the pub £20,000 in costs. The court sided with ENGIE in that Dark Blue Pig must have known the broker was being paid a commission, which is why it didn’t have to pay the broker a fee in the first place and, as such, sets a precedent for these cases – this was the first energy broker “secret commission” case to be heard in court.

“The vast majority of ‘energy claims’ end up going nowhere,” reiterated the ECA.

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Harcus Parker argues that, for a significant period of time, it was commonplace for energy suppliers and brokers to refuse to disclose arrangements between themselves to their customers, which had the effect of increasing bills.

“At a time when businesses, charities, schools and community organisations are struggling with the increasing costs of energy, we would have hoped that the ECA would recognise the harm caused by these practices,” said Harcus Parker.

Harcus Parker says that its clients’ claims in aggregate are likely to be worth more than £25m, and that the £2bn figure referred to the potential total claim size or the size of the problem.

Said Harcus Parker: “Organisations which used brokers to access the energy markets, particularly before about 2021, are very likely to have paid a price for energy which included an element of commission. Our clients’ evidence, and the documents we are seeing, do not tend to show that those commissions were properly disclosed. That is enough to give rise to a claim.”

The ECA does accept that there have been bad actors in the market, but that overall, without brokers, there would be significant deteriorations in switching rates. A few years ago, one in five businesses was reported to be on out of contract punitive rates. Thanks to brokers, said the ECA, this has fallen dramatically.

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Tim Adler

Tim Adler is group editor of Small Business, Growth Business and Information Age. He is a former commissioning editor at the Daily Telegraph, who has written for the Financial Times, The Times and the...