Call to crack down on energy broker rip-offs

THE unregulated world of energy brokers is leaving small business owners open to scams.

Broker complaints made up 382 – or roughly 10 per cent – of the issues reported to the Energy Ombudsman from small firms in the past year. Almost half were upheld.

Now charity Citizens Advice has added its voice by demanding a shake-up in the industry. A spokesman for the Ombudsman says: ‘Mis-selling is a major source of complaints, with firms saying they weren’t given the full facts on pricing by the broker. Currently, brokers are unregulated and fall outside our remit as an ombudsman. This means we are unable to require a broker to take steps to put things right.’

It does have the power to void a contract if it decides that the broker has mis-sold one.

Andy Hurst, of energy broker Beaconplus, warns the lack of regulation means unscrupulous firms get away with bad practice and pocket commissions from suppliers by signing up unsuspecting firms to costly deals.

He says his clients have received calls where brokers pretend to be from Beaconplus to secure a commission. In one case a scammer pretended to be from National Grid and threatened to cut off a company’s energy supply if they did not agree a new deal.

Gillian Guy, chief executive of Citizens Advice which can also help with energy complaints from small businesses, says: ‘The majority of brokers provide a trusted and valuable service. However, our evidence shows a minority exploit micro-businesses. We see cases of brokers employing aggressive sales tactics and not being transparent about fees.’

The upshot is firms end up paying more and are trapped in long contracts. She adds: ‘We’ve seen this lead to debt and disconnection. It ultimately increases the risk of business failure.’

Citizens Advice wants better regulation and, at a minimum, a mandatory code of practice.

The charity has highlighted the scourge in a new report – Closing The Protection Gap. Andrew Monchar, 34, who runs Londonbased vet Two by Two, has been left paying £4,000 extra for a business gas contract with E.On after he believed an energy broker he had never used before edited a call recording to sound like he was agreeing to a new contract. Monchar says: ‘They took me through the details of a new package but I didn’t give any financial details and said I would have a think.’ His complaint and subsequent appeal were rejected by the Energy Ombudsman.

Unlike households, there is no automatic cooling-off period for businesses. And only firms with fewer than ten employees and a turnover no greater than £2 million can seek help from the Energy Ombudsman. But brokers, who often arrange deals, fall outside the Ombudsman’s remit.