With energy prices continuing to rise, many of our clients are scrutinising their energy bills to make sure they are being charged correctly. They are also keen to shop around to see whether they can secure better rates if they move to another provider. This is often done using the services of a broker or a third party intermediary (“TPI”).
In this article, we will discuss two key issues to be aware of when signing up to an energy contract via a broker or TPI.
Secret commission
There have been a flurry of cases in the last few years in which “secret commission” payments to brokers and/or TPIs have been considered by the Court. Helpfully, the Court has identified two different types of secret commission:-
- Fully secret – this is where a broker and supplier agree a commission which is kept secret from the customer.
- Half secret – this is where the existence of the commission is disclosed but not the amount or structure.
In the 2024 case of Expert Tooling and Automation Ltd v Engie Power Ltd, the Court considered a claim by a manufacturer, Expert Tooling, to recover half-secret commissions paid to its broker. Expert Tooling knew that the broker would receive commission but not any of the details. The broker went into administration so Expert Tooling brought a claim against the energy supplier, Engie for breach of fiduciary duties.
The judge at first instance found in favour of Engie. One of the key reasons for this decision is that Expert Tooling was considered to be a sophisticated user. The judge considered that Expert Tooling was on notice of the commission payments and it was entirely open to them to request the relevant details (but they did not do so).
Expert Tooling has appealed the decision however and therefore we will await the decision from the Court of Appeal which is due this year to see whether any further guidance is provided by the Court.
Mis-representation
Another common issue is brokers offering seemingly attractive products but their description of the product does not actually reflect the terms and conditions subsequently offered by the energy company.
This results in a situation where you are signed up to a contract and paying a lot more than you expected and/ or some or all of the benefits you thought were available, aren’t.
In these circumstances, you may be able to bring a misrepresentation claim against the broker/ TPI and/ or energy company. The remedies for misrepresentation will depend on the nature of the misrepresentation but can include damages and/ or rescission (i.e. the contract is cancelled).
Laura Stanley and Jeremy Crook specialise in contractual disputes and have acted for a number of clients in respect of energy mis-selling claims including successfully extracting clients from mis-sold contracts. If you have any queries arising from this article or require assistance, please do not hesitate to contact us on 01392 210 700.