Trade bodies for the retail, hospitality, and social care sectors are urging Ofgem to crack down on “extortionate” commission charges hidden by rogue energy brokers.
The leading groups – including the British Retail Consortium, Association of Convenience Stores, Federation of Independent Retailers, UKHospitality, and Care England – have signed an open letter to Ofgem, organised by energy consultancy Box Power CIC. It demands that energy brokers be more transparent in the commission fees charged to small businesses so they are “fully aware and in agreement”.
In one example gathered by Box Power, the energy consultancy found a commission fee of £12,000 had been applied to a £49,000 contract for one of 16 care homes, operated by a provider for 1,200 patients in total.
The signatories said it showed how “unscrupulous brokers were taking advantage of businesses who can ill afford it”, given it is small businesses which have been worst hit by the pandemic and cost of living crisis.
“We do not agree that larger businesses are able to look after their own interests, that just because this is a long-standing arrangement it should continue, or that Ofgem are best placed looking at issues affecting microbusinesses only,” the letter stated.
Corin Dalby, CEO of Box Power CIC, said it will bypass Ofgem and seek help from government if the regulator fails to act.
“For there to be trust, there must be transparency,” he said. “They shouldn’t have to argue for support from the organisation created to protect all consumers. Rogue brokers are adding excessive commissions and all the while it is the end user who is paying for it.
“Transparency should be a given, so whatever the level of commission the business is fully aware and in agreement.
“Not only that but now businesses are incurring even higher energy prices, some brokers are adding even higher fees because they think they can get away with it. This is an extra burden on businesses at exactly the point they can least afford it. We refuse to stand by and allow this to continue and will do all we can to ensure this is brought to a stop.”
Federation of Independent Retailers national president Muntazir Dipoti added: “Independent convenience retailers are the fabric of society and play a critical role in their communities, but with the cost of doing business soaring, many Fed members are struggling to stay in business.
“It is, therefore, critical that Ofgem takes action against these hidden charges to prevent even more retailers being left severely out of pocket.”
The other signatories involved were the British Independent Retailers Association, Independent Care Group and National Council for Voluntary Organisation.
British Independent Retailers Association CEO Andrew Goodacre said: “It is vital for all businesses to have transparency with their energy bills and any other costs associated with the supply of energy. The recent significant increases in the cost of energy have made this even more important.”
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