JMW Solicitors is planning to launch legal action against energy supply giants – including British Gas, EDF and Scottish Power – on behalf of hundreds of businesses, over long term energy deals.

The claims will centre on high-cost deals arranged by brokers who also received a commission from the energy companies, without the full knowledge and consent of the customers involved.

In October 2022 the industry regulator Ofgem made it a requirement for brokers to declare their commissions to customers in “micro-businesses”, which are defined as firms with a turnover of less than £1.8m.

Nightlife entrepreneur Sacha Lord, who has consistently stood up for hospitality businesses as they face increasing economic challenges, approached JMW, with whom he has a long-standing relationship, to look into the issue of businesses being locked into expensive long-term energy tariffs arranged by brokers. They previously worked together when he successfully challenged the government hospitality rules during the Covid crisis.

Graham Small, partner in JMW Commercial Litigation team, said he believed the arrangements between power suppliers and brokers could potentially lead to millions of claims from businesses, similar to the misselling of PPI scandal. The firm plans to launch the legal case in the coming months and if successful, millions of other businesses could be able to reclaim the commissions they paid.

“Brokers received a commission from energy suppliers for recommending long-term fixed priced deals to business, but those brokers did not inform their clients of the commission properly or at all. Often commissions were hidden in energy bills by being included in the customer’s tariff. In the more serious cases, these commissions are viewed as a bribe entitling customers to compensation. 

“There are cases where the brokers’ commission makes up a significant portion of total energy costs of a business, adding significant sums to that business’ annual bill. Taking into account the millions of firms across the country that used a broker, it is possible that total claims could run into many millions, if not billions.”

Businesses that think they may have been affected should speak to JMW to find out more and submit their details, to see if they are able to register their claim.

Sacha said: “This does feel like a huge David and Goliath moment but if we can make a difference for millions of businesses across the whole of the UK including the hospitality sector who have been hit hard by energy costs then I absolutely will do it.”