Save on your business energy in minutes.

Compare Business Energy Prices & Save Up To 60%

Commissions and rip-offs: Watch out for these types of Business Energy Brokers

Photo by Cytonn Photography

It is already clear that many companies, particularly the largest, have sought the help of an energy broker in the UK. However, some small businesses are likely to consider following this path as well. Which is unfortunate, since many energy brokers prey on small businesses. 

While managing the business itself can already be a tedious task alone, so is figuring out what type of tariff will meet your needs. If you are thinking of getting a fixed contract or something a little more variable, or if you’re wishing to switch to a different provider altogether – you’re most likely thinking of using a reliable energy broker service. If you are, make sure they’re  

However, there have been several cases where working with an unregulated energy broker could lead small businesses to problems of debt and failure! That sounds like a horror story, doesn’t it? 

Well, the scarier story is: energy brokers aren’t regulated in many areas of the energy sector. They can provide services without any licence whatsoever. So be wary of who you should hire.

An energy broker handles the negotiation of prices and contracts with suppliers. They also ask suppliers to minimise costs, if possible. They provide their clients with advice that is custom-tailored to their business requirements. This seems very useful. But unfortunately, the United Kingdom is plagued by hundreds of unregulated brokers and scammers that could cause more damage than good. 

According to Ofgem, around 80% of energy users work with an energy broker – and just like all services, theirs don’t come for free. 

You can be asked to pay a significant fee by being directly invoiced by the brokers themselves, or there will be a commission that is built into your energy contract. In some cases, it’s both. 

These methods of payment are quite normal, but commissions can conceal a lot more than you think. Businesses can be paying more than they should for their service. 

Let’s talk about how commissions work 

If you’re wondering how the process of commissions works, read on.

There are plenty of energy brokers who are paid by the supplier through commissions. Typically, this is in the form of an ‘uplift’ for business energy users who are getting competitive tariffs from several suppliers. 

So the question is, how is their commission arranged? It starts with the supplier’s base rate, in which the broker will add their commission on top of it. The final rate is whatever’s on your energy bill. It is seamless since it won’t be indicated on your bill there is a price added to the monthly rate. 

Whatever you pay the supplier, some of that will go to your broker. This will continue until the end date of your contract.

Remember, commissions are not itemised on energy bills and contracts. So if you’re working with a broker and you want to find out about the commission rate, consult your supplier directly to work it out.

If you think you’re paying nothing, think otherwise! 

If you are currently working with a broker, have you ever wondered how much £ you’ve been paying for their services? 

If it’s “nothing”, then it most certainly could be something. It can be “too much”. 

While this does not apply to ALL energy brokers nationwide, there are still plenty that lacks transparency as far as commissions and rates go. There are some cases where they have added excessive rates that have been included in your energy bill. This can amount to large costs over time. 

Some brokers look for energy deals that will suit them than they suit you

If your energy broker is commission-based, then how sure are you that they are putting your interests and needs first?

Brokers negotiate an energy contract on your behalf. They will also recommend the best suppliers and deals that are available in your area. However, if there is a commission on the wings, then expect the worst. Certain impartiality might be taking place since you will not be aware of the broker’s negotiations and basis of recommendations. 

This can be managed by making sure to thoroughly check for any impartiality by considering the following:

  • Do you think they have excluded some suppliers due to how the commission will be paid? Ask the broker. 
  • If they respond with “Yes, we have excluded some suppliers,”, then ask them to explain why these suppliers have been excluded. 
  • Will the broker include the suppliers if you ask them to? 
  • Will all the contract offers be included in the report? 

Make it a habit to check for any of the things mentioned above. Worse comes to worst, you might actually be missing great deals and better suppliers because the ones recommended to you benefit the broker more than it will benefit you.

Photo by Sven Brandsma

How to know if you’re being ripped-off by an energy broker

Their efforts decrease overtime 

If you’ve worked with the same broker for a while, then you probably trust them to bits and pieces! I mean, the reason why you stuck around is that you’re certain they’re honest and trustworthy, correct? 

Well, it’s no surprise that some brokers can get lazy, especially with long-term clients. This can be due to complacency, as they are certain that you won’t cut ties with them since you’ve reached this far. 

In some cases, you might not hear from them for a long while. No updates, no “how are you’s”, no consistent reports, no more tireless work, nothing. 

Undependable Account Management

The biggest red flag you can get from your broker is sloppy work and undependable account management. Keep in mind that the broker is responsible for taking all the business energy stress out of your plate. On top of that, they are obliged to send reports regularly, and should always be available should you wish to arrange a meeting to speak with them face to face or over the phone. 

If you notice that you have been chasing them tirelessly for reports and regular updates, or if they have been ignoring your calls or dodging your inquiries, then that is a surefire sign that your broker is, unfortunately, ripping you off.  

A red flag combo breaker: if you find yourself speaking to a different person almost all the time is bad customer service in itself. That just goes to show that no one from that company is properly or formally assigned to your account! 

Several Errors in Invoices

If you’ve been finding several mistakes, errors, and complicated problems in your invoices, then chances are you are being ripped off by your broker. 

Getting the errors corrected is a tedious and time-consuming task in itself. On top of that, problems in an invoice is a bright indicator that your broker is already bad at managing basic responsibilities. Now that’s risky!

Photo by Scott Graham

They let the best rates pass you by

You might have missed dozens of opportunities to score the best rates in your area. If your broker has been letting great deals for your business energy contract pass you by, then they’re probably either slacking off, still benefiting from your current deal, or they just lack the expertise. 

Besides, the reason why you hired a broker in the first place is to be able to get better rates and act on those opportunities whenever possible, right? Well, if you’re being provided otherwise, then it’s time to look for a different broker. 

Watch out for any indicators and signs that your broker has been ignoring the best deals that could have potentially benefited you and your business! 

They do not hold themselves to a code of practice

As we mentioned earlier, energy brokers are still currently unregulated in the UK. But, that doesn’t mean that there aren’t any trustworthy brokers around. The great ones usually hold themselves to a code of practice that proves their commitment to their clients. 

A good broker is against sloppy account management and laziness. More than that, the best brokers should give their clients the peace of mind and confidence that they originally hired them for.

So, if you find that your current broker has not published a code of practice for all their current and potential clients, well, that might seem a little too fishy.

An energy broker should cater to your business needs. They must be impartial and dedicated to finding you the best deals that are available in the market and in your region that will bring value to you and your business!  

If all your energy needs aren’t taken care of by your current broker, make a change and search out a new broker.

How to avoid being ripped-off by an energy broker 

Never tolerate unprofessional, dishonest, and misleading behaviour

A lot of dishonest and scammy brokers often use the common trick of pretending to be your energy supplier. 

How is that possible and how do they do it, you ask? Well, they make it appear like there is no middle man, and you’re negotiating your contract terms directly with the supplier. But it could mean two things:

  1. Your broker is dishonest 
  2. You are unable to obtain multiple energy quotes

It makes a lot of sense to negotiate with the energy suppliers themselves when purchasing energy. So, request your broker to provide you with the pricing given by multiple energy suppliers.

Good brokers should be happy to provide their clients with as many options as possible. The bad ones usually think about what could only benefit them.

Photo by Jonathan Velasquez

Ask for professionalism when procuring business energy 

Professionalism is crucial, we should all know that by now. No matter what sector you are in, you must be open and honest to your clients. 

Unfortunately, some energy brokers are unwilling to provide transparent information to their clients. On top of that, things usually end up being a one-sided conversation between you and them. Meaning, your broker should ALWAYS be willing to be in an open discussion with you when it comes to energy procurement among many other things. 

If you want to feel like you are about to make the confident choice by hiring a or working with an energy broker, ask them the following questions:

  • The history of their company, their mission and vision, their goal, how many are they in the company
  • Are they working with any suppliers? If so, who are the suppliers with whom they work?
  • Do they know anything about your business? Are they capable of meeting your requirements and needs? 
  • Are there any case studies they can provide you with? Who have been their clients? Were they happy with their services?
  • And more information you wish to ask.

Ask as many questions as you wish, as long as they are in line with the services that they will be potentially providing you with. Do not hesitate to ask any of the questions above, especially if you’re looking to work with a broker in the longer term. 

Additionally, do not make rash decisions after the first call. Process every information that you have received from the call first. If they pressure or push you into making the decision right then and there, then they might not be the brokers for you. 

Be upfront

Talk to your business energy broker about any issues or questions that concern you. If there’s anything that you wish to tell that you can’t afford to lose, be upfront about it. 

A professional broker should talk you through whatever it is that concerns you. If you want to know if there’s a possibility of electricity or gas rates to go lower or when is the best time to sign a contract, ask away.

If you are having trouble understanding the rates, timing, and any risks that could harm your business, let your broker know about it so they may walk you through the best options possible. 

If they are uncomfortable discussing such matters with you—including the specific and crucial questions—then you should not be working with them. 

A great energy broker is also an advisor, which means that they should always be there to answer any inquiry, provide their clients with concrete solutions, and discuss possible risk factors that can be avoided with the help of their expertise and strategies. 

More from us:

Comparing Business Electricity Prices in the UK Made Easy

Before you embark on a business venture of sorts, one must first take into consideration that every business, big or small, solely relies on energy to operate seamlessly.

Compare Business Gas Prices

Just like electricity rates, the key to finding cheap rates for business gas is by comparing quotes. It is quite simple! Your location, the intensity of consumption and the size of your business will all influence the overall cost of your business energy bills;…