Emblazoned across the wall of one energy broker’s telesales floor are the words “Another day, another mug”. The sentiment says it all. Which is why I must admit to being ashamed of the sector in which I work. Ashamed but not apologetic, because for the past 10 years my team at Powerful Allies have worked tirelessly to help clients defend themselves from such predators.
And predators these brokers are, seeking out vulnerable and trusting clients upon which to indulge in a frenzy of deliberately misleading and often fraudulent trade. So, it comes as no surprise that right now top of the list of victims are Hoteliers, who by nature are good folk facing huge pressures to reduce costs.
The daily struggles of a Hotelier present the Perfect Storm for unscrupulous energy brokers.
The cause
In my experience, very few Hoteliers are aware that the UK commercial energy market is effectively unregulated by Ofgem, unlike Microbusinesses and Domestic users who benefit from the usual consumer protection we have all treasured for so long.
Neither is there “self-regulation” or even a simple Code of Practice to protect corporate clients, the category into which Hotels and much of the Hospitality sector fit. Consequently, and inevitably a “Faustian Pact” exists between suppliers and brokers, where brokers are given free rein to charge whatever they can get away with, without recourse to termination and with very little transparency of costs.
It comes as no surprise that in virtually all cases of serious mis-selling, legal action is required.
The symptom
Never before have I seen such a deluge of mis-selling and fraudulent action by brokers struggling to survive as their revenues fall and suppliers demand repayment of pre-paid commission (unscrupulous brokers routinely demand and receive up-front commission based upon estimated consumption, and with COVID 19 shutting down entire sectors of business and education, these brokers are now “in hock” to their paymasters). With over half of all brokers described by Plimsoll as financially “mediocre or in danger”, even before COVID 19, their increasingly shocking behaviour is entirely predictable.
The manifestation
It may come as a shock, but in my opinion, there are only a handful of energy brokers out of almost 2500 nationally which could come close to being described as “trustworthy”. And by that, I mean they are mature, transparent, honest in presentation of data, providing clear and unambiguous contracts, supportive of clients rather than exploitative, applying sensible margins, highly retentive of clients and able to engage with clients as a valued part of their management team.
Just a handful out of 2500. So, what are the other 98% doing for me to label them untrustworthy, or to put it another way, abusive of client trust?
There are degrees of abuse of trust by energy brokers, and I have categorised these as
a) Deliberately misleading
b) Actual mis-selling and
c) Potentially Fraudulent
Deliberately misleading
Actual mis-selling
On a daily basis, my team spend hours helping clients extract themselves from actual mis-sold contracts and the range of “scams”, for that is what they are, is growing daily. Typically, they include;
Again, it is not for me to determine when mis-selling crosses the line to become fraud, but there are some blatant and real examples where fraud is clearly intended, as follows;
Potentially Fraudulent
Avoid the worst, find the best…
Given the significant sums involved in energy contracts for the Hospitality industry, my strongest recommendation must be for Managers to be extra vigilant in appointing an energy partner and, above all, to avoid providing Letters of Authority until a comprehensive process of Due Diligence has taken place.
Due Diligence for the appointment of an energy partner.
Key services beyond procurement.
Some other simple tips…
The above is not intended to be exhaustive, but I hope it will encourage clients to be more demanding in selecting and trusting their energy partner. A good energy broker (and I firmly believe Powerful Allies is one) will protect clients from abuse, provide complete transparency and ensure all contracts are provided and entered into in good faith.
If in doubt, please do not hesitate to contact my team for our free “Walk in” energy clinic, where we can reveal all!
The Powerful Allies team are here to help, please get in touch or call us on 01380 860196.