Most business owners who used an energy broker to arrange their commercial contracts had no reason to question how that broker was paid. The broker found them a deal, the contract was signed, the direct debit was set up, the bills arrived. It looked like a straightforward commercial relationship in which everyone played their part honestly. For a significant number of those arrangements, that was not what was happening at all.
How the arrangement worked
Energy brokers earn money by introducing businesses to energy suppliers. The legitimate and transparent way to do this is to charge the client a clearly disclosed fee for the service of finding a suitable contract. The client knows what the fee is, can assess whether it represents value, and makes an informed decision about whether to proceed on that basis. That is how a properly conducted brokerage relationship operates.
What became widespread in the commercial energy market was a different model entirely. The broker was paid not by the client but by the energy supplier, through a commission embedded directly into the unit rate charged to the business. The higher the rate the broker secured, the higher the commission they earned. The business was never told about this arrangement. To them, the rate looked like a straightforward market price.
The legal problem with secret commissions
A broker who introduces a business to an energy supplier is acting as that business's agent in the commercial relationship. An agent who secretly takes money from the other side of a transaction while purporting to act in the client's interests is in breach of their fiduciary duty. This is not a grey area or a novel legal argument. It is a principle that has been established in English law for well over a century. The energy sector simply operated as though it did not apply to them.
Courts have since made clear that it does. Claims for undisclosed energy broker commissions have succeeded. Businesses have recovered the commission paid, sometimes with interest on top. The legal basis for the claim is solid.
Where solicitors came in
As awareness of the undisclosed commission issue grew, businesses began instructing solicitors to pursue claims. For those whose solicitors handled the claims competently, the route worked and money was recovered. For others, the solicitors who took on their cases did not handle them properly. Deadlines were missed. Cases were incorrectly prepared. Strategy was poor. Claims that should have succeeded did not.
When that happens, the loss does not simply disappear. The business has suffered a financial harm through the broker's undisclosed commission, and it has then suffered a further harm through the solicitor's failure to recover it properly. That second harm is the basis for a professional negligence claim, and it is a claim that can be pursued even though the underlying energy claim may now be over.
The practical significance for your business
The financial impact of undisclosed commissions varied considerably depending on the size of the business, the volume of energy it consumed, and the length of time the arrangement ran. For a large commercial operation on a multi-year contract, the inflated unit rate could represent tens of thousands of pounds over the life of the contract. Even for smaller businesses, the cumulative cost across several renewals was often far more significant than any individual invoice suggested.
Understanding the precise financial impact is part of the work that goes into building a claim. It requires access to contract documentation, energy billing records, and an analysis of the difference between the rates charged and what the supplier was actually offering. Specialist solicitors know how to obtain and analyse that material, and the picture it reveals is often considerably more damaging than the business owner originally appreciated.
The no win no fee basis on which these claims are pursued means the financial risk of the litigation sits with the specialist solicitor, not with the business. There is no upfront cost and no obligation to continue if the assessment reveals the claim is not viable. The only commitment the business makes is the time involved in the initial review, and that review is free.
Sold Short helps businesses who lost energy commission claims through poor legal handling. Specialist negligence solicitors. No win no fee. Free assessment.
