A lawsuit seeking more than £500million has been filed against energy suppliers including British Gas and SSE, with claims that businesses’ costs were unfairly inflated because of “secret commissions” paid to brokers.
Litigation firm RGL Management estimates that seven in ten British businesses could be eligible to claim and says that more than 4,000 companies have expressed a wish to join the action.
According to its analysis, £60,000 could be claimed per company, on average, and firms that signed up to gas and electricity contracts through a broker from 2012 onwards could be eligible to join the claim.
Brokers
RGL Management, which is handling the legal action on behalf of claimants, is seeking to recover “significant amounts of compensation” for companies, alleging that they “were targets of unlawful, hidden commission payments to brokers”, including Utilitywise and Utility Alliance, both of which have ceased trading, by suppliers including British Gas, EDF, Eon, Drax, ScottishPower and Gazprom.
Legal experts believe such commissions were a form of bribe and undermined the integrity of brokers, who were under a duty to provide businesses with impartial recommendations.
The aim of the litigation, RGL said, was to recover compensation for businesses that signed up to gas and electricity contracts at any time since 2012 through brokers. Harcus Parker and Leigh Day, two other law firms, have launched similar claims.
'Unlawful'
In 2019 Ofgem, the energy regulator, highlighted the practice of energy companies paying secret commissions to third-party energy brokers. Because the commissions were hidden in energy contracts, they were said to be a breach of the fiduciary duty to the customer.
RGL chief executive James Hayward said: "For many years, energy companies acted with impunity to obscure hidden payments to brokers, artificially inflating costs for UK businesses.
"Now that this unlawful practice has been exposed, RGL is launching this claim to recover appropriate redress for all affected businesses."
Energy UK, a trade body, declined to comment.