Ofgem's action against energy suppliers is 'long overdue'

A law firm representing catering businesses in a legal challenge against energy firms has said Ofgem’s plan to crack down on rogue suppliers and brokers is “long overdue”.

Harcus Parker is looking to reclaim hidden commissions paid to brokers which may have inflated the price of customer’s bills.

Last week, Ofgem set out plans to force these secret payments to be disclosed to businesses of all sizes as part of a wider review.

Brokers have only had to disclose their commissions to ‘micro-business’ customers, which have a turnover of less than £1.8m, since October 2022.

Harcus Parker said lawyers representing some energy companies had tried to use this ruling as an excuse to refuse to share how much larger companies had unknowingly paid to brokers.

"Since we started the litigation process to reclaim secret broker commissions for businesses and organisations from energy firms, we have been calling for all payments to these third parties to be clearly outlined in customers’ bills,” said Damon Parker, senior partner at Harcus Parker.

“In most regulated sectors it is standard practice that third party payments must be clearly disclosed.

“Ofgem has known about this problem for a decade and should have acted sooner but nonetheless this is good news for business customers.

“The fact that lawyers representing some energy companies have been trying to use the rules on micro businesses having to disclose commissions to argue that they are then not obliged to reveal how much they paid brokers who dealt with larger companies shows that the energy industry needs tighter regulation.”

Around 5,000 businesses have joined Harcus Parker’s claim, including over 1,300 catering businesses.

Ofgem has also called for businesses to be able to take complaints to the energy ombudsman and for suppliers to be more flexible with firms that signed contracts during the peak of energy prices.

The energy regulator said it hoped to put its proposals into action before the winter.

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