Mis-Sold Energy Contracts
It seems there are still many unscrupulous and very greedy so-called "Energy Brokers" who are still giving the industry a bad name.
This post from Chris Felgate (copied below) was on LinkedIn recently and highlights the mis-sold energy contracts issue.
"No broker is a charity—we charge for our services and aim to deliver value to our clients. But that doesn’t mean fees should be a blank cheque. There’s no universal “standard” commission level in the market; each broker sets their own (with the client’s consent) alongside the supplier.
If you believe the example below is fair, I’d really appreciate you walking me through the rationale. I’m struggling to see how it can be justified, but I’m absolutely open to understanding a perspective I might be missing.
Presumably this would be explained to the client—so could you explain it to me? What calculation or reasoning leads to this level of cost? Is it simply a case of “we go big and wait to be bartered down,” or is there a more structured methodology behind it?
I’ve just reviewed a contract signed in January for 1.3 GWh of gas.
The broker’s role is limited to arranging the contract and offering reactive support (i.e. occasional help if the customer raises a query). There are no additional value added services.
The supplier’s base price is 3.2p/kWh, with a 2p/kWh commission paid to the broker (bringing the delivered price to 5.2p/kWh), plus an additional 27p/day commission via the standing charge.
That equates to roughly £26k in commission on a total annual spend of about £80k—around 33%.
We come across this level of charging fairly often and find it difficult to justify to clients when there’s no clear added value.
Most business owners don’t actually want to spend time thinking about energy.
They’re busy running their company, managing staff, dealing with customers and trying to grow their business. The last thing they want to do is spend hours analysing electricity contracts or trying to predict what the energy market might do next.
The problem is that energy contracts have become increasingly complex over the years.
Between supplier terms, renewal windows, standing charges, wholesale price movements and government levies, it can be very difficult for businesses to feel confident they are making the right decision.
Thats why we have partnered with the Independent provider Bionic. The goal is simple — to help businesses understand their energy contracts and make sure they aren’t paying more than they need to.
Sometimes that means helping a business secure a better contract.
Other times it simply means reviewing what they already have and confirming they’re in a good position.
Either way, it gives business owners one less thing to worry about.
If you ever need a second opinion on your electricity or gas contract, we’re always happy to take a look and point you in the right direction.
In these uncertain times its really important to keep on top of your energy contracts and it wouldn't take more than a few minutes just to asses what your current deal is like and what you can expect. As a responsible broker we are totally transparent with our brokerage fee.
Comments