A landmark decision in the fight against energy mis-selling has been handed down by the Court of Appeal, setting a crucial legal precedent that could open the floodgates for thousands of businesses to claw back hidden broker fees.
The Court of Appeal made significant findings relating to the liability of energy brokers. Liability in respect of energy suppliers is to be considered further by the Supreme Court.
Victoria Myers, Director of specialist litigation firm Energy Solicitors Limited (ESL) said: “This marks a crucial moment in the ongoing battle against energy mis-selling. Brokers must now operate with greater transparency and businesses are in a stronger position to challenge unfair practices. We will be right by their side to ensure they successfully do that.”
The Court of Appeal’s judgment represents a significant step forward in holding energy brokers or Third Party Intermediaries (TPIs) to account. It reinforces the obligations brokers owe to businesses, making it clear that they can no longer rely on vague or misleading disclosures when charging energy commissions.
ESL supports businesses that have been mis-sold energy contracts, helping them recoup thousands over the lifetime of the energy contract.
Victoria added: “With the unregulated energy broker market continuing to grow at pace, this ruling provides a vital safeguard for businesses seeking fair and honest energy deals.
“Running a business is hard enough and energy prices are already high, so the last thing businesses need is to pay hidden and undisclosed commission for their energy, increasing these already high costs.
“This ruling really paves the way for businesses who believe they have been mis-sold to, clarifying what can be a confusing market and making the process of recovering funds easier for businesses.”
A key element of the judgment is the clarification as to what constitutes informed consent. The judgment made it clear that businesses must be fully informed about commissions added to their energy bills. Simply knowing that brokers receive payment from suppliers is not sufficient. Companies must be given precise details, including:
- The exact amount of commission charged
- How commission payments impact energy costs
- How brokers’ commission structures influence contract terms.
This ruling raises the bar for disclosure and transparency, making it far more difficult for brokers to rely on generalised or incomplete information.
The energy broker market has expanded significantly in recent years. According to Cornwall Insight, the TPI market has grown from a value of £232 million in 2014 to £525 million in 2024. The intermediary sector continues to grow with hundreds of operators, many of which turnover significant sums, and there are no signs of a slowdown as they continue to saturate the market.
Despite its rapid growth and the role brokers play in securing commercial energy deals for businesses, there remains a significant risk of energy brokers inflating energy prices through hidden commissions while the sector remains unregulated. Businesses can be left exposed to conflicts of interest and become vulnerable to unscrupulous brokers who hide commissions.
The ruling also dismissed reliance on arguments that a customer ought to have known what was happening by reason of known ‘industry practices’, a common defence advanced by energy brokers and suppliers. Similarly, attempts to exclude fiduciary responsibilities through contractual clauses have been rejected, reinforcing that brokers have a fundamental duty to act in their clients’ best interests.
The significance of this ruling cannot be understated – it provides businesses with a clear legal framework in which to recover hidden commissions gained by energy brokers.
