London law firm Harcus Parker which is launching a group legal action to reclaim secret commissions paid to brokers by energy giants without businesses customers’ knowledge welcomed Ofgem’s announcement that these payments must be disclosed to all non-domestic customers.
The energy regulator said it was extending the same protections it introduced to micro-businesses last year which means it has to spell out how much commission is paid to third party brokers.
Undisclosed broker commissions which have been added onto the unit cost of gas and electricity are said to have falsely inflated energy prices for up to two million businesses and organisations in the UK over the past decade. Harcus Parker believes the legal claim against energy firms could be as high as £2 billion.
At the end of last year, Ofgem said all micro-businesses must be told how much commission is paid to third parties but Harcus Parker said during the litigation process some energy firms have been trying to use this ruling as an excuse to refuse to disclose how much larger companies have paid to brokers.
Damon Parker, senior partner at Harcus Parker, which is based at Aldwych in central London, said, ‘We are delighted that Ofgem is extending the requirement for all businesses to be clearly told how much commission they are paying to brokers although we do feel this is long overdue.
‘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 on customers’ bills
‘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.
‘We hope that our campaigning to raise this issue has played a part in the energy regulator taking action.’