Over 1,300 catering businesses sign up to energy legal challenge

More than 1,300 catering businesses have joined a £2b legal challenge against energy firms accused of inflating customers’ bills to pay ‘secret’ commissions to third-party brokers.

Law firm Harcus Parker said the payments were not disclosed to customers and could have driven up the cost of bills for up to two million businesses and organisations in the UK.

It is preparing to launch a group litigation to reclaim the commissions and wrote to multiple energy companies earlier this year.

Of the 5,000 businesses that have joined the claim, The Caterer understands that 850 are restaurants and cafés, 262 are takeaway businesses, 175 are pubs and bars and 58 are hotels.

Damon Parker, senior partner at Harcus Parker, said: “The catering industry has had to face very difficult trading conditions in recent times and we are very aware that energy costs have been a major cause for concern.

“We hope that by returning some of these secret broker fees we may be able to alleviate some of the financial burden that businesses are suffering.

“Catering businesses tend to be heavy consumers of energy so if they have paid undeclared broker commissions stretching back a number of years they can expect to claim back thousands of pounds.

“We are delighted that so many businesses from the catering industry have joined the claim.

“There’s been a huge acceleration in the amount of companies that have signed-up to the legal claim in the past week and we’re keen to continue that momentum.”

Harcus Parker has signed up businesses from a wide variety of sectors including large manufacturers, high street stores, sports clubs, community organisations, faith groups and charities.

Research conducted by the law firm found that one energy supplier offered brokers as much as 10p/kWh in commissions that were then added to customers’ bills, often without their knowledge.

A number of energy suppliers were also found to have offered brokers secret commissions of between 1p-3p/kWh.

Industry regulator Ofgem only made it a requirement for brokers to declare their commissions to ‘micro-business' customers, defined as firms with a turnover of less than £1.8m, in October 2022.

A separate legal action over the issue is being launched by law firm JMW Solicitors and Sacha Lord, night time economy adviser for Greater Manchester, who described the challenge as a “David vs Goliath moment”.

Energy industry regulator Ofgem has faced growing pressure to take action against energy companies, and UKHospitality said the behaviour of some firms had been "disgraceful" when prices rose over the winter.

"We recognise the harm that can be caused to small businesses when they are not made fully aware of how much they could pay within their energy bill to a third-party energy broker," an Ofgem spokesperson told The Caterer in February.

For more information about Harcus Parker’s group claim, visit energylitigation.com/