'Rogue' energy brokers spark £2.5 billion worth of compensation claims

ITV News understands thousands of companies are considering legal action over the way they were sold energy deals

There are fears that an energy scandal is emerging as the industry is gripped by accusations of inflated charges, secrecy and unfairness.

The concerns centre on energy brokers who earn fees by offering to find customers the best deals.

Our new research shows thousands of businesses, charities and voluntary groups are now backing a looming legal clash with the power firms over allegations of hidden commissions running into billions of pounds.

We spoke to FM Coatings, a small supplier to the motor trade near Newcastle, which used energy brokers.

The firm believes that over six years it cost them around £750,000 in hidden fees.  

Michael McNicholas told ITV News: "You trust these people to do what they've told you they're going to do, and clearly, they haven't been doing that.

"They've been more interested in charging hidden and extra commission to line their own pocket.

"And I think what makes you more angry is the large energy providers have allowed this to happen".  

Brokers act as intermediaries between the business, charity or other organisations and the energy company.

The customer relies on them to find the best deals - and brokers earn commissions.

But our new research shows at least 15,500 compensation claims are currently being pursued, with around £2.5 billion now at stake.

ITV News spoke to Jermaine Bennett, who was an energy broker.

He now works with Harcus Parker, a claims firm that is planning group action for compensation on behalf of customers.

He told ITV News: "In my 12 years of being in the energy sector, I can tell you now, we've seen so many rogue brokers.

"They would lead the customer into thinking they're going on the best possible deal on the market, when in actual fact, they've enhanced their bill by more than 20, 30 per cent per annum."

Jermaine Bennett says he always took pride in getting customers a good deal, but claims many energy brokers were cashing-in by focusing on small originations.

Mr Bennett said: "What they would normally do, would be target certain sectors, so for example charities; churches.

"Now, they would do this because, generally speaking, it's someone like a bursar - who's not really experienced in the energy sector, and they would put maximum commissions on top of the customer's bill."

Emma Pinchbeck, one of the most senior spokespeople for the power companies, insists that the industry has exercised proper controls over its use of brokers.

She said: "What they have done - at least the suppliers we work with - is put in place strong governance standards, so they've got contract terms; they try and work with brokers they think are reputable - and there are reputable brokers out there.

"The issue is, in order to supply some bits of the market, we have to work through brokers who are not the best in class, or where we are worried about the treatment of customers on the other end of the system.

"And that's why it can't just be about the suppliers - it's got to be about the regulator using the powers they have to oversee the market."

The energy regulator Ofgem doesn't have powers to oversee brokers, despite concerns spanning more than a decade.

Meanwhile the trade body for energy brokers says hidden fees are not widespread and that claims firms are exaggerating the commissions they make.

Rodney Sinden from The Utilities Intermediaries Association said he would agree that energy brokers should always disclose their fees upfront, but that, "it requires Ofgem or somebody like that to insist".

Many firms that used energy brokers believe a massive energy scandal is emerging.

The power industry's regulator Ofgem told us it has asked the government to impose new rules - but so far that has not happened. 

A spokesperson for the government's Department for Energy Security and Net Zero said: “We believe it is vital customers are getting good service from their energy supplier and any third-party providers. 

"We are supportive of Ofgem’s calls to make the sector more transparent and to increase access to the resolution dispute scheme for energy brokers.

”But many remain worried that professionals supposed to help with energy costs have too often only added to the problem."

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