Energy claim landscape

Current Landscape:

 

Recent legal actions have highlighted the extent of this issue. In January 2024, thousands of small businesses initiated group legal proceedings to recover up to £2 billion in undisclosed broker fees added to their energy bills. These commissions, in extreme cases, constituted up to 60% of the energy costs, placing additional financial strain on businesses already grappling with high energy prices.

 

The hospitality sector has been particularly vocal about these challenges. In March 2025, UKHospitality, representing numerous hospitality businesses, formally requested the UK's Competition and Markets Authority (CMA) to investigate the energy market. They cited concerns that small and medium-sized enterprises (SMEs) were being overcharged due to aggressive sales tactics and undisclosed commissions by unregulated energy brokers. 

 

Legal Considerations:

 

The legal framework surrounding secret commissions has evolved, with courts increasingly recognizing the fiduciary duties that intermediaries owe to their clients. A notable case is Wood v Commercial First Business Ltd (2019), where the court determined that in instances of fully undisclosed commissions, claimants need only demonstrate that the intermediary had a duty to provide impartial advice. This ruling has lowered the threshold for businesses to challenge such commissions.

 

However, each case is fact-specific. For instance, in Expert Tooling and Automation Ltd v Engie Power Ltd (2024), the High Court found that while there was a fiduciary duty, it did not necessarily extend to disclosing the exact amount of the commission. This indicates that outcomes can vary based on the specifics of each situation. 

 

Pending Developments:

 

The CMA is considering a formal investigation into the non-domestic energy market, prompted by concerns from various business sectors about entrenched competition problems. This potential investigation could lead to significant regulatory changes aimed at enhancing transparency and fairness in the energy market. 

 

Additionally, the energy regulator, Ofgem, has consulted on changes to supply licence conditions to require full transparency on commissions paid to energy brokers. While Ofgem has requested government intervention to regulate energy brokers—who currently fall outside its remit—it is also working to ensure that customers are properly informed and protected through appropriate regulations on energy suppliers. 

 

In summary, the UK commercial energy sector is undergoing significant legal and regulatory shifts concerning the disclosure of broker commissions. Businesses are increasingly challenging undisclosed fees, and regulatory bodies are responding with potential investigations and reforms aimed at fostering a more transparent and equitable energy market.