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mis-sold business energy contract

How to Handle Being Mis-sold a Business Energy Contract

| Alex Dovey |

In the dynamic and often complex landscape of business energy contracts, the unfortunate reality is that not all transactions unfold with transparency and fairness. Due to a lack of regulations and no clear guidance from Ofgem, businesses, regardless of their size or industry, could find themselves locked into a mis-sold contract. This issue is one that demands our attention and understanding, for its consequences can be financially burdensome and operationally stifling.


Have you been mis-sold a business energy contract?

It’s possible for energy brokers to mis-sell business energy contracts. This leads to businesses paying more for their energy than they should because the energy broker has either:

  • Not discussed their fee or not clearly displayed how they (the broker) is compensated for their services.
  • Not fully disclosed all elements of the energy cost and therefore showing an artificial price
  • Enrolled the business in a long-term contract when it’s not always appropriate for the client

Things go from bad to worse as once a business agrees an energy contract there is no cooling off period, and they are now trapped in a costly deal. Terminating a business energy contract is a complex and difficult process and therefore being mis-sold a contract is a serious issue.


How Energy Brokers pricing works

Before you can determine if you have been mis-sold an energy contract, you have to understand how the business energy broker pricing model works which is summarised below:

  • A theoretical cost of an energy contract is 30p/kWh per hour.
  • A broker will add on a commission, e.g. 2p/kWh.
  • The total price a business would pay is 32p/kWh per hour and the commission paid to the broker from the supplier is 2p/kWh.


Why do energy brokers add commission?

The level of commission allows a broker to cover the cost of their operations and also the value add they offer clients. This can include the finder’s fee and consultancy in advising businesses the best energy contract based on their previous and predicted levels of consumption. They also offer a whole host of services from energy legalisation to metering and client portals.

This model is the industry standard for how brokers charge and are paid for their service. It is not a model that puts a business at a disadvantage unless the business is not aware of the brokers commission rate.

Energy brokers are businesses that need to operate too, and they will have to add a markup in the form of the deals they procure for their clients so they can operate as a business. Remember that their income is dependent on your consumption, and if you consume less energy, they receive less commission from the supplier.

It is also worth noting that brokers can usually procure more cost-effective energy deals than businesses can alone. This due to a broker’s pre-existing relationships with suppliers and the discounted rates they can secure, which even when a broker commission is added is still less than what a business would see on traditional market comparison websites.

An honest broker will always be working in the best interest of their client. Energy broker firms usually also offer energy consultancy services and are actively trying to support their clients in reducing their consumption to help them reduce their costs and reach their net-zero targets.

The reason this model has become so popular is that it helps clients consolidate all payments to the energy supplier, instead of adding another vendor to their payment process if they were to pay a broker directly.


If this is how energy brokers operate, how do I know if I was mis-sold too?

You have only been mis-sold a business energy contract if the broker was being wilfully deceptive and purposely misleading you in their sales process.

A transparent broker will be upfront with their fees and the commission rate would be clearly included on the contract you agree to and/or documentation you are provided. This can be included in the unit rate of the energy, do not be surprised if energy claims companies consider this to be a bad practice.

If you cannot clearly see a broker’s fee, or they claim they offer a free service or will be paid a set fee by the energy supplier, then treat this as a red flag and investigate further the deal they are presenting you.


How to avoid being mis-sold to by an energy broker

There are several things that businesses can do to avoid being mis-sold a contract and we would advise to consider the following:

Contract length

Before agreeing a deal make sure you are happy with the contract length and it works for your attitude to risk.

Longer contracts benefit brokers as the commission continues into subsequent years. On average a business energy contract lasts 2 years, if your broker is trying to offer a longer contract because of potential market trends, remember that the energy market is highly volatile and subject to change. There is greater risk in agreeing to a longer contract as the market may change and you can always use the same broker again as you develop a good relationship with them.

However, you are at risk of paying more if markets do increase and your broker was correct in predicting the market. This is a judgement call you have to make as a business owner and how you expect the market to perform in the long term.

Understand your energy bill

By understanding your energy invoice and all the different line items and costs it will be easier to see the fees that are associated with the broker, and fees which are associated with the energy supplier. Study your previous energy invoices and understand these in the best detail to help you identify any potential hidden fees.

Transparent pricing

As mentioned, it is quite common to see a broker’s fee included in the unit rate. Be careful if a broker is making claims that you don’t have to pay for their service or if it’s a free service. Brokers should not lie about how they are paid and if you are unsure, you can ask them for more information. The paperwork from your supplier will clearly show the value in pounds based on your level of consumption and your broker is within their rights to show their fees within the unit rate.

Understanding your energy requirements

By understanding your own consumption and energy requirements, you can avoid being mis-sold a contract where the usage limits are not accurate to your needs. A broker will not benefit from overselling an energy contract because their payment comes from your consumption levels. However, you still want to take care and make sure you agree a contract with the correct levels of consumption you require. By agreeing to use too much energy you may find yourself overpaying and being stuck in the wrong type of contract as suppliers usually apply different prices based on your expected level of consumption. Suppliers purchase the energy in bulk from a generator and if they are left with surplus energy they are out of pocket and pass these costs on to you with penalties if you do not hit the levels of consumption you agreed.

To do this you need to conduct accurate meter readings across your sites and report on your energy usage. Look at previous bills with your current supplier that hold consumption data and carefully consider what your future consumption may look like, especially if there are any operational changes forecasted.

What to do if you have been mis-sold too

If you suspect that you have been sold a business energy contract under false pretences, you might have the right to seek compensation for any financial losses you’ve experienced.

So what are your options?

Collect Evidence

To initiate the process of reclaiming funds from a wrongly sold agreement, start by collecting all relevant evidence. This will include your invoices, the energy contract itself and all communication with your broker. In addition, make sure you have a record of all commitments that were made such as fixed rates or potential cost savings.

Check Your Contract small print

Thoroughly examine your energy contract and scrutinize it for any irregularities. Should you come across any inconsistencies, raise these issues with your energy broker or supplier. This process might become complex if you’re unfamiliar with the contract’s language or its contents. You may be able to receive support from a legal firm to help you understand the contract language.

Business energy contracts can be difficult to understand and business owners and general managers usually do not have the time to examine the finer details of a contract. However, it’s critical to remember that you have the right to fair pricing and Professional Energy Services prides ourselves on being the most transparent broker on the market. If you feel a previous broker has taken advantage and either placed in hidden fees to your agreement you may be able to seek legal advice.

Go direct to the broker

As you have a previous relationship with the broker, do not forget you can go directly to them to resolve any issues. They may be able to explain more fully how the pricing structure works or perhaps there has been an error on your invoice that can be resolved.

Seek Legal Advice

There are several claims companies that can check and investigate on your behalf. It is a complicated process that can take several weeks or months. These companies usually investigate how much you’ve been mis-sold by and with the right evidence can be successful and secure a refund of hidden fees that were not included in the original contract.

Claims companies

It’s important to not be led astray by energy claims businesses who may imply that a broker must directly disclose their commission. There have been no legal cases won that made it to court because broker costs were clearly displayed in the unit rate and available on energy supplier invoices. Businesses have ample opportunity to review all documentation and paperwork before agreeing to use a broker’s services. If you decide to seek out a claims company for support, check for insurance that they will cover any legal fees you may incur as part of their service offering.



To safeguard against the risk of mis-sold contracts, it’s crucial for businesses to comprehend the energy broker pricing model, ensuring transparency in fees. Factors such as contract length, billing comprehension, pricing transparency, and accurate energy requirement assessment should be considered. If suspicions of mis-selling arise, collecting evidence, scrutinizing contracts, and engaging directly with brokers are initial steps, followed by seeking legal advice. Overall, awareness, transparency, and diligence are vital for businesses navigating the complex business energy contract landscape to protect against potential pitfalls.

Still unsure on if you have been mis-sold a contract?

Professional Energy Services would be more than happy to help. Our team of energy experts can quickly identify any hidden fees within your contract and explain the price breakdown of your invoice. We would be happy to answer any questions you may have.

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