TPI Fraud – Are You Paying Too Much Commission?

Mis-sold Energy Contracts – The Background

If you were asked to place a value on how much UK customers are being scammed for by rogue energy brokers, what would you guess? A few million…?

Mis-sold energy contracts and third-party intermediary (TPI) fraud is a booming business. It’s unlikely you have even heard about this type of scam before – it has been quite successfully kept under wraps for years now, with only a few speaking out against it. The most common way in which UK customers are scammed is by agreeing to pay a hidden ‘broker commission’ but malpractice is absolutely not limited to this.

Back to the burning question – how much money are we being scammed out of?

It may horrify you to find out that over 2 billion pounds are taken from UK customers every single year. That is enough to build the Wembley Stadium… twice.

Source – Metro

That is 2 billion pounds going directly into the back pocket of cold-calling, unscrupulous, morally bankrupt brokers. Can you believe this isn’t covered in the front pages of every single national newspaper?

There are numerous little loopholes in which TPIs can exploit to part you from your money. Even though they often don’t, suppliers and brokers must disclose whether you will pay a commission and how much it will be at the point of sale. If they do not – it is fraud.

Unfortunately, the fact that this practice is illegal does not seem to deter many. There are now well over 3,000 energy brokers within the UK – although many will operate within the regulations, there are also plenty who flaunt them.

If this has happened to you or anybody you know then you could be entitled to claim back your money from both supplier and broker. Keep reading to find out how.

Source – The Guardian

Mis-sold Energy Contracts – The Techniques

This article will mainly focus on commission-based mis-selling, although we have included some common ‘techniques’ to be aware of. This list is in no way exhaustive and there will be other methods employed.

TechniqueAbout
Mis-SellingIt may be surprising to know that energy brokers are not legally obligated to offer the best deal to customers. This leaves rogue energy brokers free to pass off contracts that provide themselves with the most money as the ‘best’ for the customer. This can be through contracts that offer high broker’s commission, or unsuitably long contracts.
Lack of TransparencyEnergy brokers will not clearly present their contractual fees and charges to customers – do you know how much rogue brokers will profit from your monthly energy bills? Most people don’t. They are also not obligated to present all available options and can present a select few as the only options. Often these are the ones that offer the largest margins for the broker.
MisrepresentationA common tactic employed by rogue brokers is to falsely identify themselves so that customers believe they are operating on the behalf of a supplier. This is a good way of exerting pressure onto businesses to change contracts that suit rogue brokers.

How Commission Is Hidden Within Contracts

Most commonly, commissions will be hidden in contracts following an energy contract sale from an ‘agent’, ‘broker’, ‘introducer’ or ‘TPI’ over the phone. There are many different faces to this scam.

It is incredibly difficult to tell who you are actually speaking to over the phone, and it is not uncommon for brokers to disguise themselves as someone else in order to gain leverage over the customer. Most commonly this will be in the form of energy suppliers themselves.

Broker commissions or introduction fees are completely legal – it is only when the customer has not been made aware of them prior to agreeing on a contract that it crosses into illegal activity.

As a rule of thumb – never agree to anything over the phone. It is legally binding and often recorded by brokers for future evidence.

Source – Claim Experts

How Much Could Your Claim Be Worth To You

This varies from customer to customer. As the commission is almost always based upon consumption, there is little to no way to calculate without knowing this value (or an approximation).

We will run through a quick example to demonstrate how much your claim could be worth to you.

Energy cost: 20p per kWH

Broker Commission: 5p per kWH

Total Unit Cost: 25p per kWH

Estimated Monthly Consumption: 500kWH

We have outlined the parameters for this example above using completely fabricated values. Your bill and charges may look entirely different, so do not panic if this is the case.

By multiplying the total unit cost by monthly consumption, we can find the total billed amount that the customer will pay to their supplier.

0.25 x 500 = £125

However as 5 pence of the total unit price is made up of mis-sold commission, we can calculate exactly how much of this monthly bill goes directly to the broker.

0.05 x 500 = £25 a month

25 x 12 = £300 a year

It is worth remembering that this is a relatively small monthly consumption for this calculation. In the real world, consumption figures are much higher. For businesses (depending on industry) it is likely to be even farther still.

How To Begin A Claim?

If you are one of the thousands of people affected by this type of scam, then you may be able to claim back some of your money. More importantly, you may find a way out of your dodgy energy contract.

It is advised to reach out to a business that offers energy contract claims as part of their service. This is to maximise the potential for a successful claim, as-well as the likelihood of a faster result.

Before beginning your claim, you should spend some time sorting through any paperwork received from your broker/supplier to provide evidence for your claim. It will also make it easier to pass on this information to your claim’s provider.

Source – This Is Money

It’s Not All Doom And Gloom – Ofgem

In 2020 Ofgem announced new suggestions on how to improve the energy retail market, by tackling this issue. With smart-metering becoming commonplace, increased support for customers, and faster more reliable switching it is hoped that there will be a real impact in tackling rogue energy brokers. This includes a new two-week cooling-off period for any businesses with a new energy supplier, giving them the freedom to reconsider the terms of the contract. A new dispute resolution service for unhappy customers will mediate discussions between energy brokers and dissatisfied customers. These measures should hopefully redistribute the unequal power dynamic between rogue brokers and customers.

If you are worried that you may fall/have fallen victim to malpractice then it is important that you complete your own research – this should give a good idea of how much suppliers actually charge for their energy services. This should also make it easier to identify if and when there are hidden costs within a contract. Be vigilant for high-pressure sales pitches as often this is a good sign that you are being pushed a contract that is beneficial for the broker.

If you would like to learn more about the ins and outs of the energy sector, have a browse of the Ofgem website here: Ofgem.co.uk

Don’t Go It Alone – We Are Here To Help

It can be scary fighting your claim against a big company by yourself…

But who ever said you had to go it alone?

Energy Solutions have worked in the business of energy procurement for over twenty years now, so we know how things should be done the right way. Our trained experts know the business of energy like the backs of their hands, so if you are looking for someone knowledgeable to help fight in your corner – we will be there.

Take the first step today – contact us to find out how much money you could save.

If you are looking for some friendly advice or even just a chat about energy, you can call us on 0131 610 1688 during all normal UK office hours.

Alternatively, you can use our webform, email us at nick@energybrokers.co.uk, or WhatsApp us on 07757 400 788.

We look forward to hearing from you!

Google Snippets

Have I been mis-sold an energy contract?

If you operate a micro-business, it is incredibly likely that you have been – estimates of up to 90% of micro-businesses using a broker have fallen prey to mis-selling.

How to tell if I have been mis-sold an energy contract?

It is incredibly difficult to tell if you have been mis-sold an energy contract – but not impossible. Dig out your contract and invoices and scan for any charges or fees that look unusual. If in doubt, contact Ofgem, your supplier, or other intermediaries.

How to tell if an energy contract is a scam?

If you are being contacted over the phone – the likelihood is that an attempt to trap you into a verbal contract is being made. Be wary of ‘introduction fees’ or ‘commission’ as these (and similar terms) are buzzwords for energy mis-selling.

How do I claim energy contract commission back?

Most commonly you will need to begin a business energy hidden commission claim with an intermediary. There are many businesses out there who will help you claim your money back, for a fee.

How much is my hidden commission claim worth?

There is no real way of telling as often it is based on consumption and other unknown variables. Most commonly commission is worth a few pence per unit of energy used.

Extrapolate this over your total monthly consumption to figure out how much your claim could be worth. Claims can be worth anything from £1,000 to £500,000

How do I claim money back from an energy broker?

You will need to submit a business energy hidden commission claim if you are a victim of a hidden broker commission scam. This can be done through an intermediary company.

For more information about this post and how Energy Solutions can help with your Electricity, Gas, or Water, click on the links, or check out the contact details at the bottom of the page.