Challenging the ‘Rogue Energy Brokers’ Narrative – Open Response to Jillian Ambrose, Guardian Energy Correspondent

Challenging the ‘Rogue Energy Brokers’ Narrative – Open Response to Jillian Ambrose, Guardian Energy Correspondent

By -Published On: July 31, 2023-Categories: Business, Energy Consultants, Market Insight, News-

The Energy Consultants Association (ECA) appreciates the opportunity to address your article on “rogue energy brokers” dated 25th July.

As the only energy consultant association in the UK entirely made up of consultants and brokers, we aim to clarify several crucial aspects and discredit any misconceptions, surrounding the invaluable contributions of energy brokers in helping businesses save costs and make informed decisions regarding their energy contracts.

The ECA is dedicated to upholding the highest standards of integrity, professionalism, and transparency, ensuring that our members serve businesses and customers with the utmost commitment to ethical practices.

The Essential Role of Energy Brokers

Energy brokers play a vital role in the UK energy market. They manage circa 45% of SME/Micro business energy contracts and over 90% of large I&C contracts.

Their primary mission is to assist UK businesses in saving both time and money by providing multiple supplier options, smooth supplier transitions and expert advice and contract management.

The article in question was factually incorrect, misleading, and sensationalist.

It causes harm by driving customers towards unregulated energy claims companies, which are themselves a serious cause for concern over their misleading advertising standards.

Setting the record straight

Correcting Misinformation on Broker Importance

Firstly, you indicate that a third of UK businesses use a broker – this is incorrect.

The figure, including both SME and I&C, is around 50% as per third-party industry experts Cornwall Insight.

Year after year, an increasing number of UK businesses are turning to brokers and consultants to navigate the challenges posed by suppliers.

They seek expert guidance on pricing, avoiding deemed rates and unnecessary charges, managing regulatory changes, and exploring infrastructure options.

Impact on Customer Savings

As more customers utilise the services of brokers and consultants, we have seen a steady decline in the number of customers on out-of-contract rates – in turn, saving UK businesses hundreds of millions of pounds every year.

Ofgem recognises the invaluable service brokers provide to their customers in both navigating their renewals and switching suppliers where necessary to benefit their business.

Clarifying Commissions

You state, “Energy suppliers will be forced to come clean on the billions in secret commissions they load onto business contracts.” 

This is factually incorrect, sensationalist, and misleading.

The average business contract length is 2.5 years.

2 million contracts available for tender.

2 million / 2.5 = 800,0000 contracts per year.

With 50% using a broker = 400,000 contracts per year. 

Using your calculation of billions, let’s assume this is 2 billion (the lowest it could be using your definition).

£2,000,000,000 / 400,000 meters = £5,000 per customer

Reviewing Actual Broker Commissions

Now let us review the actual commission brokers earn.

Estimating the typical UK business consuming 40,000 KWh a year over a 2.5-year contract, this would be 100,000 KWh.

A typical average broker uplift between 2018 and 2023 would have been around 1p per KWh.

This would equate to a £1,000 average commission per customer.

Brokers also support their customers during the life of the contracts, supporting customers with services such as bill queries and validations, liaising with suppliers, flexible purchasing agreements, usage analysis and much more.

The cost as a percentage of the customer bill is comparable in most instances with other brokering sectors – in fact, slightly cheaper.

Correcting Misinformation on Fee Disclosure

In 2022, Ofgem introduced mandatory fee disclosure across micro-business contracts.

You state that these disclosures only occur “in contracts for microbusinesses of 9 or fewer employees”.

This is incorrect.

The accurate definition is as follows:

A non-domestic consumer is defined as a micro business if they:

  • Employ fewer than 10 employees (or their full-time equivalent) and have an annual turnover or balance sheet no greater than £2 million, or
  • Use no more than 100,000 kWh of electricity per year, or
  • Use no more than 293,000 kWh of gas per year.

This definition captures a considerable number of businesses and their subsequent contracts.

We estimate, most of all SME contracts now have fee disclosure. Often by suppliers following OFGEM legislation where needed and, in some cases, going further than required.

You infer that only a small proportion of contracts have disclosure – this is factually incorrect.

Most do

We are confident you will now understand, your reference to only a small number of contracts having disclosure, is factually incorrect.

Transparent Fee Disclosure

In addition, within our membership, most brokers updated their terms and conditions from 2017 onwards to make fee disclosure more transparent.

Most brokers have had fee disclosure within their terms and conditions and get customers to agree to be bound by those terms.

Clarifying Sentencing and Calls to Action

In your separate article dated 25th July, entitled “Liars and Manipulators” you appear to link the sentencing of Andy Pilley for actions between 2014 and 2016 to current complaints arising from UK businesses around energy claims.

What is interesting here, apart from the obvious time gap, is the fact that Mr Pilley owned a supplier.

He also ran a brokerage that claimed to be independent, which has been proven to be completely false.

You can read our views and calls to Ofgem on this matter here.

Andy Pilley

Addressing Complaint Levels

The ECA strongly believes that Mr Pilley’s actions are morally reprehensible and, as a supplier, should be investigated by OFGEM.

The ECA members have an exceptionally low level of customer complaints relating to commission disclosure.

Unproven Claims and Responsible Reporting

Claims companies such as Callum Thompson and others are whipping up media attention to focus on an issue that remains unproven and untested in court.

Interestingly, the ECA notes only two reported cases of energy claims commission – the most recent being the case of the Dark Blue Pig v Engie.

The claim had been for just over £9,000. The unsuccessful claimant was ordered to pay ENGIE’s legal costs of £20,000. Costs liability in this case therefore far exceeded the value of the claim.

This outcome highlights the potential risks faced by claimants and claims companies pursuing baseless commission claims, underscoring the importance of seeking specialist advice, conducting thorough reviews of contracts, and minimising future risks.

Questioning Unreliable Sources

In this case, the customer was left with £20,000 in legal costs after losing.

It’s also interesting that Mr Callum Thompson is frustrated that “many settle on the doors of the court.”

Our members don’t recognise this, perhaps as such settlements aren’t occurring, and cases are not being taken to court as reported, due to the chances of success being so low.

Given the author’s previous reports into the affairs of the Thompson family, we are also alarmed that the Guardian would use a source such as Callum Thompson, who was the Operations and Commercial Director of Utilitywise. 

Creditors lodged claims of £116.1 million at the time of the Utilitywise collapse. Initially, at the time of entering administration, 570 jobs were lost.

Upholding Ethical Practices

Almost all brokers, of which the ECA is aware, have clear terms and conditions, making the way in which they charge customers extremely clear.

There will, of course, as in any sector, always be those that abuse relationships – but this is the small minority and not, as your article appears to indicate, the majority.

Advocating for Responsible Reporting

Finally, it’s worth highlighting that the claims companies you are giving airtime to, are also unregulated.

We have written to the Government raising concerns over misleading advertising and customers being misadvised (like the Dark Blue Pig) with thousands in costs on lost claims.

(Link: Energy Consultants Association – Dark Blue Pig v Engie)

We have attached some examples of the types of advertising they use – which is incorrect and misleading.

They typically have wildly inflated claims calculators on their websites using broker uplifts of 5p or 10p, which is simply a fantasy.

Many talks of average commissions earned of £30,000 or more – again, a fantasy.

If the success of these claims were as reported, we would naturally see more judgements being made.

Inaccurate Portrayal of Energy Brokers

In summary, your articles provide a distorted view of the importance of energy brokers – linking activity from jailed individuals from 8 years ago and referring to a handful of companies and claims management companies/lawyers desperately trying to use the media to advertise their “solutions.”

All in the pursuit of profit.

It incorrectly quotes the Ofgem definition of Micro business, fails to understand the typical commission brokers earn, and wrongly assumes or infers that all or most brokers are “rogue.”

Conclusion

In conclusion, the article by Jillian Ambrose misrepresents energy brokers’ vital role and perpetuates misconceptions.

Energy brokers play a key role in saving costs and enabling smooth supplier switches, providing vital benefits to both customers and suppliers alike.

We encourage The Guardian Energy Correspondent, Jillian Ambrose, to reconsider the portrayal of energy brokers in the article “rogue energy brokers” dated 25th July.

The Energy Consultants Association (ECA) seeks fairness and accuracy in reporting and believes that a balanced representation of energy brokers’ positive impact on UK businesses is essential.

We kindly request that The Guardian either retracts or amends the original story to reflect the invaluable contributions of energy brokers in helping businesses save costs and make informed decisions about their energy contracts.

Alternatively, we invite The Guardian to consider publishing a subsequent article highlighting the essential role of brokers in supporting UK businesses.

Misleading claims from unregulated companies should not overshadow the valuable contributions of responsible brokers.

Thanks for reading.

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