Understanding Business Energy Claims – Hidden Broker Commissions Explained

As a business owner in the UK, you've likely dealt with rising energy costs, especially in recent years. Many turn to energy brokers (also known as Third-Party Intermediaries or TPIs) to negotiate better deals with suppliers. These brokers promise to shop around for the cheapest rates, often claiming their service is "free" because they get paid by the supplier.

But here's the reality: in many cases, that payment comes in the form of hidden commissions added directly to your energy unit rates. You end up paying for the broker's fee through inflated bills, often without knowing the amount or even that it exists. This lack of transparency has led to a growing wave of business energy claims, where companies seek compensation for mis-sold contracts.

This issue has been building for years and gained momentum in 2024-2025 with key court rulings. As we enter 2026, more businesses are waking up to potential refunds worth thousands – sometimes tens of thousands – of pounds.

How Hidden Broker Commissions Work

Energy brokers typically earn commission from the supplier they place you with. This is usually a markup on the unit price (e.g., an extra 1-2p per kWh) or a percentage of your total spend. Over a multi-year contract, this can add up significantly – in extreme cases reported, commissions have made up 20-60% of the bill.

The problem arises when:

• The broker doesn't disclose the commission at all.
• They vaguely mention it but not the amount or how it's calculated.
• They claim the service is free or paid only by the supplier (technically true, but the cost passes to you via higher rates).

Brokers have a legal (fiduciary) duty to act in your best interests and obtain your informed consent for any commission. If they prioritise deals that pay them more over cheaper options for you, that's a conflict of interest.

Common tactics include:

• Pushing longer contracts (more years = more commission).
• Claiming they've searched the whole market when they've only checked suppliers that pay high fees.
• Embedding the commission in the rate without itemising it on quotes or contracts.

Unlike residential energy, business contracts have no cooling-off period and can lock you in for years, amplifying the impact.

Why This Is Considered Mis-Selling

The energy regulator, Ofgem, has long highlighted concerns about broker transparency. While brokers aren't fully regulated yet, they must follow general laws on fairness and disclosure. Court cases have clarified that undisclosed or poorly explained commissions breach fiduciary duties – similar to "secret profits" rules in agency law.

Key developments:

• In 2024-2025, court rulings (including influences from car finance commission cases) strengthened claims, ruling that full informed consent is required.
• A 2025 Court of Appeal decision rejected arguments that businesses "should have known" about commissions, emphasising transparency.
• An upcoming Supreme Court case (Expert Tooling v Engie) in 2026 could further define supplier liability.

Ofgem is pushing for regulation: starting in 2026, they'll survey the market and design rules requiring brokers to register and disclose fees clearly. Full rollout may take longer, but this signals change.

Estimates suggest millions of businesses (especially SMEs) have been affected, with potential total compensation in the billions – compared by some to the PPI scandal.

Signs You Might Have a Valid Business Energy Claim

Look out for these red flags in past or current contracts:

• Broker said their service was "free" without explaining the uplift in rates.
• No clear breakdown of commission on quotes, contracts, or invoices.
• Rates seem higher than direct supplier offers.
• Pressure to sign quickly or extend contracts.
• Verbal agreements where terms were rushed.

Even old contracts (going back decades in some claims) or ones you've already paid off could qualify.

How Much Compensation Could You Get?

It varies by contract length, usage, and commission size. Successful claims have recovered:

• Full refund of the hidden commission.
• Plus interest or damages for overpayment.

Averages reported: £10,000-£25,000 for typical SMEs, higher for larger users (e.g., hospitality or manufacturing). Some hotels and B&Bs have reclaimed thousands via recent cases.

What to Do If You Suspect Hidden Commissions

1. Gather evidence: Contracts, bills, emails/quotes from the broker.
2. Ask your supplier or broker for commission details (many now provide on request).
3. Complain directly to the broker/supplier – they may settle to avoid court.
4. If unresolved: Use free alternatives like the Energy Ombudsman (for some disputes) or court.
5. Consider specialist help: No Win No Fee firms handle assessments for free, but direct claims keep 100%.

Be cautious of cold calls promising big payouts – stick to reputable sources.

As regulation tightens in 2026, transparency should improve, but for past deals, now's the time to check. Many businesses are reclaiming what's rightfully theirs without realising how widespread this was. Visit Ofgem's site for guidance or get a free contract review – it could save (or refund) you a fortune.