A small amusement arcade business based in County Durham and trading as Queenie’s Casino Slots, received thousands of pounds in compensation as a result of a court claim in a landmark case over a mis-sold business energy contract.
Following the legal case heard at Leeds County Court, ENGIE—the global energy and services group operating in three key business sectors was held liable for the mis-sold energy contract.
The court also identified a conflict of interest between the broker and the client, noting that the broker had set the commission amount and contract duration, contrary to the client's best interests.
Further Facilitating Business Energy Claims
Opening the claim floodgates for thousands of small businesses—companies with a turnover below £1.8 million, this recent exposure further facilitates legal claims in a scandal deemed bigger than PPI.
Unlike residential consumers, most businesses in the UK require specialised energy supply contracts, typically arranged through energy brokers.
The role of these energy consultants involves negotiating with energy suppliers on behalf of businesses, striving to secure more advantageous contracts than the businesses could secure directly from the providers.
However, brokers have been surreptitiously adding on undisclosed commissions to energy tariffs while purportedly securing the best available prices for their clients. This misleading practice, dating back decades, has now come to light, triggering a flood of legal claims.
For many businesses grappling with the energy crisis, these hidden fees could mean the stark reality between staying afloat and facing closure.
Unveiling the Impact
Highlighting the tip of the iceberg, Microsoft News recently uncovered several cases illustrating the challenges inflicted by mis-sold energy contracts on small businesses nationwide.
The news engine revealed the desperate struggle these businesses encounter as they now find themselves "fighting to survive" after being subjected to secret broker fees on their energy bills.
Reporting on the case of South London restaurateur, Faisal Khan, Mr Khan told Microsoft News that he had relied on an energy broker for nearly 15 years, trusting them to secure the best deal for his business. However, he alleges that he was never informed about the undisclosed commission
Mr Khan said his monthly electricity bill increased from £700 to £1,400 over the past two years, putting a huge strain on his business.
Mr Khan explained to Microsoft News:
“We trusted the brokers fully and allowed them to do what they could to get the best prices—we were too busy trying to keep our business running. But over the years, it all adds up to a lot of commission. It got very difficult when the energy increased, especially with food prices going up by 40 per cent, labour costs going up and footfall down because of Covid. We’ve had to cut more and more hours and lay off staff in order to pay for the energy. To get some money back, in our situation, would be fantastic, a great bonus."
Decades of Mis-Selling
Following decades of mis-selling linked to these concealed commission arrangements, business organisations raised concerns with Ofgem about the need for more support in energy issues.
A survey conducted by Ofgem in 2018 revealed that 67 percent of small business customers opted for an energy broker for tariff selection. These tariffs often came with fixed rates extending up to four years and without any cooling-off period.
Moreover, unlike energy suppliers, the commercial energy broker sector remains largely unregulated. As reported in The Sunday Times, up to 80 per cent of energy contracts for small businesses have been mis-sold.
More recently, Ofgem closed this loophole by initiating a consultation aimed at elevating service standards for businesses and enhancing transparency concerning the expenses linked to third-party energy brokers.
Andrew Smith, Owner of Queenie’s Casino Slots Said:
“We are pleased to have won damages against the supplier. It may not seem like a huge amount but for a small business like ours it makes a big difference. Like many others, we are trying to operate in challenging economic circumstances. Energy bills are big enough as it is without having to fork out more."
The Presiding Judge at the County Court in Leeds, Said:
"Relevant information was kept secret and that concealment was, in my judgment, deliberate on Engie’s part. It was in Engie’s interest to keep the brokers happy and to attract them to do business with Engie as opposed to another electricity supplier. If the customers did enter [into] electricity supply contracts with Engie, then the brokers would obtain a payment (by way of a commission paid on a fixed figure per kWh) from Engie. It was Engie’s policy to not reveal the size or nature of this commission.”
Mr Smith went on to say:
"Many other businesses may have fallen foul to this type of practice costing them thousands of pounds in the process—money they can’t afford. No business wants to be ripped off. Check your energy bill or get support. It’s important to make sure you are not overpaying through hidden fees.”
Alongside small businesses, KWS Litigation are urging all non-domestic energy users, including charities, sports and social clubs and places of worship to come forward.
From here, the company’s expert litigators will assess whether clients might be entitled to claim for mis-sold energy contracts.
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