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How to Spot a Mis Sold Business Energy Contract And Get Your Money Back
Picture this: you’ve been diligently trying to reduce your business’s energy costs, only to discover that your trusted energy supplier had trapped you in a mis-sold contract all along. Frustrating, right?
Don’t worry; this article will guide you through the process of identifying any red flags in your business energy contract and how to claim compensation for it—because the last thing you need is to lose hard-earned money on a deceitful deal.
Has your business energy contact been mis-sold?
There are several warning signs that your business energy contract may have been mis-sold, including higher-than-projected energy costs, assurances that everything is fine even as prices rise, acting on advice from a broker without fully understanding the terms and conditions of the contract, and receiving bills that are significantly higher than expected.
If you suspect your business energy contract was mis-sold, we offer a free service to help you determine if you’re eligible for compensation. Our no-win, no-fee approach means you won’t owe anything unless we are successful in our claim. Contact us today to learn more.
Identifying Mis Sold Business Energy Contracts
As a business owner, you have the right to expect that the energy contract you sign with an energy supplier is fair and transparent. Unfortunately, some energy brokers engage in questionable practises and may misrepresent certain elements of a contract to their clients. The first step in identifying a mis sold business energy contract is understanding what constitutes a breach of trust.
For example, if an energy broker fails to fully disclose any fees or commissions associated with an energy contract, it is safe to say that such a contract has been mis sold. In other instances, brokers may downplay risks or signal unrealistically low prices as indicative of normal rates.
It is worth noting that there are two types of mis selling: deliberate and accidental. When a broker deliberately misleads a client, they are committing fraud. This can occur when they leave out important information regarding the cost of a contract or include hidden charges in order to increase their commission.
However, it is important to note that misrepresentation can sometimes be accidental. Perhaps the broker simply did not understand the terms of the contract, or they received incorrect information from the supplier. Nevertheless, regardless of whether or not it was intentional, if you believe your business energy contract has been mis-sold then you have cause for concern.
In order to make informed decisions about your energy contract options, it is essential that you know what common warning signs to look out for.
Check If You Have A Business Energy Claim
Answer 3 simple questions to see if you are eligible to make a Business Energy Claim
Warning Signs of Misrepresentation
When seeking out an energy broker to find the best deal on your behalf as a UK business owner, it’s essential that you remain vigilant and aware throughout every step of the process.
One common warning sign of misrepresentation is being assured that everything is fine even as prices continue to rise beyond projected costs. Others may focus too much on the savings that their clients will enjoy while failing to provide sufficient information regarding the potential downsides of a particular energy contract.
It is also important to be wary of brokers who do not disclose what they earn from a deal. Such brokers may charge hidden fees or commissions over and above what is typical for the industry.
To put this in perspective, imagine if you hired an employee and they lied about their experience or background in order to get the job. In such an instance, it would be appropriate to take action against this individual, and the same goes with a broker who misleads you into signing a mis sold business energy contract.
It is important to recognise the warning signs before it’s too late. In our next section, we’ll look at some specific examples of potentially misleading behaviours by energy brokers so that you can remain informed and protect yourself from future mis selling.
- When searching for an energy broker to secure the best deal for your UK-based business, it is crucial to avoid potential misrepresentation.
- Factors such as rising prices, too much emphasis on savings without discussing downsides, and brokers who do not disclose their earnings may indicate misleading behaviour.
- Such activities could lead to a mis sold business energy contract, and it is essential to recognise warning signs before it's too late.
- Businesses must remain vigilant throughout the entire process to protect themselves and make informed decisions.
Hidden Fees and Commissions
One of the most significant issues with mis sold business energy contracts is the presence of hidden fees and commissions. The commissions earned by energy brokers can sometimes be up to 50% of the total contract value, meaning that businesses could be unknowingly paying much more for their energy than they need to be. This kind of practise was relatively common in the past when brokers would earn commissions called Evergreen fees on a continuing basis even after contracts were renewed.
Imagine finding a great deal on a new business energy contract through an energy broker. You sign on the dotted line, thinking you’ve secured a low rate and are paying a fair price for your energy. However, it later comes to light that the broker failed to disclose additional fees or commissions that they earn from the contract. You suddenly realise that you’ve been overpaying for your energy for months, maybe even years!
Unfortunately, this situation is all too common. Many brokers fail to properly disclose the commissions they receive, and some even hide extra fees in contracts that businesses may not notice until it’s too late. This deception ultimately costs companies hundreds or even thousands of pounds annually.
It’s similar to buying a car, only to find out later that the dealership added unnecessary extras and charged you extra without your knowledge. Just as customers should have transparent pricing information from car dealerships, businesses should receive clear information about any fees associated with their energy contracts.
Now that we understand how hidden fees and commissions can create financial issues for businesses, let’s discuss the financial consequences of mis sold contracts.
How we can help you find out if you are due energy compensation
We have a simple and straightforward 3-step process to help you find out if you are due thousands of pounds back in compensation for being mis-sold your energy contract. There are no hidden costs – our Free Eligibility Check will not cost you a penny!
Fill in our Claim Form
Simply fill in a few details on our short claim form. We just need to know your business details, contact information and the name of your energy provider. It takes less than a minute!
Sign Your Letter of Authority
If the details on your claim form show that you may have been mis-sold your energy contract, all you need to do is sign a Letter of Authority and we will continue to progress the claim on your behalf.
Get Your Compensation
Once your claim has been forwarded to our expert legal team, it will take some time to process the details and provide a resolution. We will keep you informed of the progress of your case every step of the way.
Financial Consequences of Missold Contracts
Missold business energy contracts can lead to numerous financial problems for companies, ranging from overpayment costs to redress payments.
According to recent figures, over £389 million has already been paid back in redress payments, and this number is still growing. This means that businesses have recovered at least some of their lost funds after being mis-sold energy contracts.
However, not all companies will be successful in their claims for compensation to recover overpayment costs. If a business has signed onto a contract willingly, without fully understanding the terms, they may not be entitled to recover any lost funds. It’s essential to ensure that you seek professional advice before making any claims for compensation.
Some people argue that energy brokers do provide valuable services when finding the best deals for businesses. However, this argument fails to take into account the fact that business owners often don’t fully understand the fine print in these contracts nor are they told how much commission is built into them.
In order to avoid falling prey to missold contracts and hidden fees, follow the steps in our next section and seek assistance from qualified professionals.
£389m has already been paid back in redress payments
….and this number is rising.
Overpayment Costs and Redress Payments
When it comes to energy contracts, overpayment costs and hidden fees are too common. Misrepresentation can lead to businesses paying more than they should for energy and utilities, which ultimately means revenue loss for the company. The good news is that if a company has been missold an energy contract, the courts have mandated that redress payments be paid out in order for companies to regain their losses.
In 2018, one major energy supplier was forced to pay back over £700 million after it was revealed that thousands of customers were overcharged due to high exit fees on the fixed price deals sold to small businesses. These overcharges were more than enough to bring several small business owners to the brink of insolvency.
It’s essential to note that unlike many other financial mis-selling situations, such as PPI claims, not all energy mis-selling instances involved illegal behaviour or deception. Many brokers are simply guilty of incompetence or lack of care when evaluating each business’s needs and recommending cost-effective packages.
Some people argue that businesses who failed to read the fine print or anticipate fluctuations of commodity prices should bear some responsibility. However, it is also true that suppliers sometimes change their pricing in a very sneaky manner at precisely the times when invoicing systems are being changed or payment deadlines are approaching, making management even harder. In those cases, failure to flag changes in time or warn clients appropriately can still count as mis-selling.
Now you might be wondering what your options are if you suspect your business could have been missold on an energy contract.
Steps to Recover from Missold Contracts
First things first: if you think your business may have a claim for compensation due to a missold energy contract, act quickly and get professional assistance right away. Here are a few steps you can take to help the claims process go as smoothly as possible:
Gather Evidence: Collect all your energy bills and contracts from the past few years. If you have any complaints logged with your supplier or broker, make sure to have those on hand as well. Your provider will also release yearly Statements of Renewals, which may show what commission was obtained by your broker. All of this information can be used to support a mis-selling claim.
It’s crucial to review the fine print of your contract before signing it. Many companies have made themselves vulnerable by failing to read or double-check every detail before signing off on an agreement. However, that is not always enough if there’s a language barrier, no access to legal experts or poor understanding of how pricing structures work.
Picture yourself buying a new car from a dealership. You trust the salesperson who has shown you all the fancy features, explained all the optional extras and you believe them when they say that they are giving you the best price for such a high-quality car. But then when it comes time to pay, hidden extras and commissions bump up the costs way beyond what was originally discussed. Wouldn’t you feel misled?
Seek Legal Assistance: An expert in business energy contracts can help navigate through the often-complex claims process, including how to present evidence in the most convincing way possible and ensure that you don’t miss any crucial deadlines.
Working with a reliable claims management company can save you time, hassle, and stress that comes with trying to fight on your own against large energy suppliers and brokers.
Keep in mind that filing a claim is only half the battle; it’s also essential to ensure that your business secures fair treatment from energy contractors going forward.
Check If You Have A Business Energy Claim
Answer 3 simple questions to see if you are eligible to make a Business Energy Claim
Seek Professional Assistance
If you suspect that your business energy contract may have been missold, it’s important to seek professional assistance. While it’s possible to pursue a claim on your own, the process can be complicated and time-consuming. Enlisting the help of an experienced energy claims specialist can increase your chances of success and streamline the claims process.
One way to find a reliable claims specialist is by asking for referrals from other business owners in your industry who have gone through a similar experience. You could also ask for recommendations from trade associations or look for reviews online. Be sure to evaluate each potential service provider carefully before making a final decision, paying attention to their experience, reputation, fees, and success rates.
A good energy claims specialist will assess your situation carefully and advise you on the best course of action. They will handle all the paperwork involved in making a claim, including gathering evidence of misrepresentation or false promises made by the energy broker. They will also work with you to negotiate a settlement with the energy supplier and may even represent you in court if necessary.
If you’re unsure whether or not you’ve been missold a business energy contract, seeking professional advice can help you make an informed decision.
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Client results
Business Energy Refund Service
There are many things that businesses can do to ensure they receive fair treatment from energy brokers and suppliers. These practises include:
Due Diligence: Before entering into a contract, it’s critical to research the suppliers and brokers who will be handling your energy needs. Read reviews, check references, and make sure you’re dealing with reputable companies.
It’s essential to remove any assumptions one may have, such as assuming pricing structures are “similar” for all contractors. This is often not the case; what works for one company might not work for another – even within the same industry.
Consider two different restaurants cooking the same meal using similar ingredients. One restaurant charges twice more than the other and claims it uses higher-quality ingredients; however, the quality difference has no discernible impact on taste or customer satisfaction. That’s how energy contracts sometimes work, too.
Regular Reviews: Once under contract, regularly review its terms and pricing structure. If there are hidden fees or rate changes, take immediate action.
Finally, establish a good professional relationship with your broker. While this should not guarantee mis-selling won’t happen, it might give you leverage when negotiating refunds or modifying certain terms in contracts.
Energy is an essential resource for most businesses out there; it helps power equipment and keeps businesses productive. However, being mis-sold an energy contract can have dire consequences on a business’s financial stability if not detected early enough which can cause extensive loss of revenue. The good news is that if you suspect that your business has been missold an energy contract or is currently paying more than necessary due to hidden fees and commissions from your brokers, you do indeed have options available to recoup some of those losses.
Ensuring a Fair Business Energy Contract Experience
Another option available to businesses that have been missold energy contracts is the Business Energy Refund Service (BERS). This service helps businesses determine how much they may have overpaid on their energy bills and facilitates the process of claiming compensation.
BERS operates on a no-win, no-fee basis, meaning that clients won’t owe any fees unless they’re successful in their claim. The service provider will assess your situation and guide you through the claims process, gathering evidence of misrepresentation or hidden commissions as needed.
Think of it like having a personal injury lawyer who works on commission. They will take on your case, do all the necessary paperwork, and represent you in court if needed. The only difference is that they’re working to get you compensation for a missold energy contract rather than an injury.
Some businesses may be hesitant to use a service like BERS, assuming that they can handle the claims process themselves and save money. While it’s true that you can pursue a claim independently, doing so can be challenging, especially if you’re not familiar with the energy industry or legal system. Enlisting the help of an experienced energy claims specialist through BERS can increase your chances of success and make the process more manageable overall.
If you think you may have been missold an energy contract and want help navigating the claims process, consider contacting a professional energy claims specialist like BERS. With their expertise and guidance, you may be able to recover money that you never should have paid in the first place.
- As of 2023, £389 million has already been paid back in redress payments to businesses that were mis-sold energy contracts, and this number is still rising.
- Research conducted in the UK has shown that in the case of undisclosed commissions, brokers earn an average of 3p/kWh on each commercial energy deal they arrange, while the actual cost of energy for businesses is around 15p/kWh.
- A study conducted in 2022 revealed that instances of mis-selling in the business energy sector have increased significantly, with a growing number of brokers failing to disclose their commissions earned through deals they source.
Building Trust with Energy Brokers
When it comes to business energy contracts, the key to ensuring a fair experience is being well-informed and knowledgeable about what you need. One way to do this is by monitoring your energy usage regularly, so you know how much energy you consume and can adjust it accordingly. Additionally, it is important to stay up-to-date with current market trends and prices for energy to be aware of any potential fluctuations or rate increases.
Furthermore, carefully reviewing the terms and conditions of any prospective contract before signing on the dotted line is crucial. This includes understanding the time period of the contract, any potential exit fees or penalties for early termination, and any other miscellaneous fees that may be included.
In fact, many businesses have fallen victim to missold energy contracts because they were not properly informed or aware of these details. By taking the time to review and analyse all aspects of a contract, businesses can avoid costly mistakes down the road.
Another factor in ensuring a fair business energy contract experience is choosing a reputable energy broker. It is essential to select one who has a proven track record of successfully helping businesses find competitive rates and favourable terms. This means conducting research and reading reviews from previous clients to determine their level of satisfaction and success with their services.
Think of hiring an energy broker like hiring a personal trainer: you want someone who is knowledgeable, experienced, and genuinely interested in seeing you succeed. A good trainer will tailor workouts specifically to your needs and goals, while also providing encouragement and guidance along the way. Similarly, a reputable energy broker will work with you to find an energy plan that meets your specific business needs while also providing valuable advice and support throughout the entire process.
Once you have found an energy broker you trust, maintaining open communication is crucial. By keeping them informed about any changes in your business operations or energy usage, they can help you stay abreast of any relevant updates or adjustments that may be needed to your contract.
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Frequently Asked Questions
Unfortunately, there are several ways in which businesses can be missold energy contracts. One of the most common ways is through deceptive marketing tactics used by energy brokers who promise unrealistic savings or offer fixed rates that turn out to be much higher than market prices.
According to data from Ofgem, the UK energy regulator, around one in six microbusinesses have experienced issues with their energy broker, with the most common problems being around high costs and misleading sales practises.
Another way businesses can be missold contracts is through hidden fees and charges that are not clearly disclosed from the outset. This can lead to unexpected bills and financial difficulties for small businesses.
It’s also worth noting that some suppliers may misrepresent themselves as “green” or environmentally friendly when in reality they rely heavily on fossil fuels. This is known as “greenwashing” and can mislead businesses who are looking to support sustainable energy options.
To protect your business from being missold an energy contract, it’s important to research potential suppliers and brokers thoroughly, ask for clear information about costs and fees upfront, and seek professional advice where necessary.
If your business energy bills are increasing without explanation, you may have been missold a business energy contract. This practise is particularly common in the UK, where over 40% of SMEs have been overpaying for their energy due to misleading and opaque contracts (source: Federation of Small Businesses).
One way to determine if you have been missold a contract is by checking if it meets the basic requirements set out in the Business Energy Code of Conduct (BECC). The BECC outlines that energy suppliers must provide clear and transparent pricing information, alert customers to any changes in tariffs or usage requirements, and avoid using aggressive sales tactics. If your energy contract does not adhere to these standards, there is a high chance that it has been missold.
Another key indicator of a missold contract is hidden charges and fees. These can include additional metering costs, exit fees, and inflated unit rates. In some cases, businesses have found that they are being charged for services they did not ask for or need. Make sure to read the fine print of your contract and keep an eye out for any unexpected charges.
It’s important to note that even if you suspect your business energy contract has been missold, you may still be hesitant to take action due to fear of repercussions from your supplier. However, under OFGEM regulations, suppliers are prohibited from retaliating against customers who make complaints or seek redress for unfair practises.
Overall, it’s essential for businesses to regularly review their energy contracts and billing statements to ensure they are receiving fair and transparent pricing. Don’t be afraid to speak up if you suspect a potential case of misselling – it could save your business thousands of pounds in unnecessary costs.
Businesses can take several steps to protect themselves from being missold an energy contract in the future. Firstly, they should do their research and shop around for the best deal, as well as reading the small print carefully before signing any contracts. This can help prevent them from becoming trapped in long-term contracts with unfavourable terms or hidden charges.
Secondly, they can use third-party energy brokers who have been accredited by industry bodies such as the Utilities Intermediaries Association (UIA) or the Broker Registration Energy Scheme (BRES). Accredited brokers must adhere to strict codes of conduct, ensuring that they act in the best interests of their clients.
Finally, businesses should always be on the lookout for common misselling tactics used by unscrupulous energy providers, such as cold calling or pressure selling and exaggerated savings claims. According to a report by Ofgem, up to 45% of SMEs received unsolicited calls about energy in 2019.
By taking these steps, businesses can significantly reduce their risk of being missold an energy contract and save money on their bills. It is estimated that UK businesses could save up to £2.4 billion annually by switching energy contracts or renegotiating their existing deals (Source: Carbon Trust).
Energy providers have a responsibility to investigate any complaints of misselling and address them in a timely and appropriate manner. In the UK, energy companies are regulated by Ofgem, which requires them to have clear procedures in place for handling complaints.
Typically, when a complaint of misselling is made, the energy provider will conduct an internal investigation and attempt to resolve the issue directly with the customer. If the matter cannot be resolved satisfactorily, customers may escalate their complaint to Ofgem or the Energy Ombudsman Service.
According to Ofgem’s latest report on energy complaints data, there were around 1.9 million complaints made by energy customers in 2020. Misselling was cited as one of the top five reasons for these complaints. However, it is worth noting that the number of complaints related to misselling has decreased in recent years, due in part to increased regulatory scrutiny and awareness among consumers.
In addition, energy providers may also face financial penalties if found guilty of misselling or failing to adequately address customer complaints. For example, in 2019 British Gas was fined £2.3 million by Ofgem for breaching rules on billing and complaint handling.
Overall, while incidents of misselling can occur in the energy sector, there are mechanisms in place for addressing customer complaints and holding providers accountable for their actions. It is important for consumers to stay informed about their rights and options when it comes to energy contracts and seek assistance if they suspect they have been missold a product or service.
If you have been mis-sold a business energy contract, the legal remedies available to you depend on the nature and extent of the mis-selling. In general, there are two main types of remedies: contract rescission and damages.
Contract rescission means that the contract is cancelled and both parties are restored to their original position before the contract was signed. This is appropriate when the mis-selling was so fundamental that the contract should never have been agreed upon in the first place. In this case, you would be entitled to a full refund of any charges paid under the contract.
Damages, on the other hand, are compensation for any losses or costs that you have incurred as a result of the mis-selling. This might include paying higher energy prices than you would otherwise have paid, or being locked into a long-term contract with unfavourable terms and conditions. In some cases, damages may also cover consequential losses such as lost profits or business opportunities.
To pursue either of these remedies, you will need to engage with your energy supplier directly or escalate your complaint to a third party such as Ofgem or an Alternative Dispute Resolution scheme. It’s also worth seeking legal advice to ensure that your rights are protected and that you receive fair compensation.
According to Ofgem’s latest data, in 2020 they received over 2100 complaints relating to business energy contracts. Of these complaints, around 60% related to billing issues and around 25% related to contract terms and conditions. If you believe that you have been missold an energy contract, don’t hesitate to take action – it’s estimated that UK businesses lose around £2 billion each year due to mis-sold energy contracts.
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