CHARITIES are among millions of businesses and community organisations that lawyers say could be entitled to compensation from UK energy giants over alleged secret commissions paid to third-party brokers, inflating customers’ bills by billions of pounds.
The start of the legal action comes as many charities struggle to keep their doors open due to soaring gas and electricity prices.
Leading litigation law firm Harcus Parker has begun sending letters before action to energy companies in the first step in group litigation to reclaim undisclosed commissions paid by suppliers to brokers without customers’ knowledge.
Gas and electricity suppliers are accused of offering these undisclosed payments to incentivise brokers to sign up customers with little or no consideration of whether the energy is or, is not, cheaper for the end user. The commission amount does not appear on energy bills and the law firm says if the broker and the gas and electricity companies have failed to disclose to the customer how much they are being paid then this amount can be claimed back from the energy company.
Small- and medium-sized businesses including charities, schools, faith groups, sports groups, care homes, local authorities and other community organisations are all said to have been targeted by unscrupulous brokers.
In some cases, the secret payments have inflated bills by 50% in a practice that appears to have developed over the last 20 years.
Research conducted by Harcus Parker found that one energy supplier offered brokers as much as 10p/kWh in commissions that were frequently undisclosed to the customer. A large number of suppliers offered secret commissions of between 1p and 3p/kWh.
The litigation is being launched as the Government drastically scales back subsidies given to millions of struggling businesses and community organisations under the Energy Bill Relief Scheme. From April, most non-domestic energy customers will receive a subsidy of just 2p/kWh. Many curry houses fear it could be the last nail in the coffin.
Damon Parker, a senior partner at Harcus Parker, said:
“We are very aware that charities at the moment are in the cost-of-living crisis.
“Some unscrupulous brokers have targeted organisations that they regard as less sophisticated.
“We are conscious that the increase in gas and electricity prices have hit charities very hard.
“The aim of the legal action is to help organisations and businesses recoup some of these secret commissions from the energy companies that may help ease the financial burden of the energy crisis.”
It is calculated that, at any one time, around two million non-domestic customers are paying these undisclosed fees.
Harcus Parker, which has already signed up several hundred claimants, says that the average claim is currently around £20,000 per customer and that long-term contracts for heavy energy users could give rise to claims of well over £1m.
It has in excess of £10m of litigation funding to fight the case and believes the total amount owed by the energy companies could top £2bn.
Mr Parker added:
“The claims are fully funded and insured and, as a result, we are able to act for clients who ordinarily would not have the resources to access justice in a claim of this kind, on a ‘no-win, no-fee’ basis.
“I would urge all curry houses and takeaways who have used an energy broker and who were not told how much and how their broker would be paid to see if they are eligible to claim.”
Harcus Parker has set up a dedicated website for those wishing to make a claim: Home – Harcus Parker | Energy Claims (energylitigation.com).