Over 1,700 catering firms join energy bills legal challenge

07 February 2024 by
Over 1,700 catering firms join energy bills legal challenge

Hospitality businesses may have seen as much as £250m added to their energy bills over the last decade through hidden commissions paid to brokers, a law firm has warned.

Harcus Parker has accused energy suppliers of inflating millions of customers' bills by surreptitiously adding third-party commissions onto the unit price for electricity and gas.

The law firm is preparing to launch a no-win, no-fee, group legal action which aims to recoup up to £2b for businesses across the UK.

More than 1,700 catering firms have signed up to the claim to try and win back payments.

Harcus Parker said on average, these businesses have been overcharged by 1.7p per unit of energy, equivalent to up to 10% of the average energy bill issued over the past decade.

"Catering businesses are often heavy consumers of energy and, if they have undeclared broker commissions stretching back a number of years, they can expect to claim back thousands of pounds," said Damon Parker, senior partner at Harcus Parker.

"We know there are thousands more catering establishments who are eligible to join the claim and would urge them to sign up as soon as possible."

Faisal Khan (pictured), who runs Frankie's Café and Restaurant in Sutton, is among the operators to join the claim.

He used an energy broker for nearly 15 years to help find him the best deal for his south London business.

Khan's monthly energy bill has doubled from £700 to £1,400 over the past two years. He was never told of the hidden commission fees added to bills and believes he could have got a better deal elsewhere.

"I could see when I shopped around that the energy prices were lower than I was paying, but because I have an outstanding balance on a month-to-month basis, it was difficult to change supplier," he said.

"Instead of going to another energy company I stuck to the same broker, which just increased my balance.

"We trusted the brokers fully and allowed them to do what they could to get the best prices - we were too busy trying to keep our business running.

"But over the years, it all adds up to a lot of commission. It's very annoying, and ridiculous."

Harcus Parker's research found that one energy supplier offered brokers as much as 10p/kWh in commissions that were then added to customers' bills, frequently without their knowledge.

A large number of suppliers offered brokers secret commissions of between 1p - 3p/kWh.

A separate legal action over the issue is being launched by law firm JMW Solicitors and Sacha Lord, night time economy adviser for Greater Manchester, who described the challenge as a "David vs Goliath moment".

Currently, only the smallest businesses can see a breakdown of fees paid to brokers, but energy industry regulator Ofgem wants this to be extended to businesses of all sizes.

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