A landmark ruling by the UK Court of Appeal has set a powerful legal precedent in the fight against energy mis-selling, offering thousands of businesses new grounds to reclaim hidden fees charged by energy brokers. The decision clarifies the legal obligations of Third Party Intermediaries (TPIs), commonly known as energy brokers, and raises the bar for transparency in commercial energy contracts.
While the Supreme Court is yet to rule on the extent of energy suppliers’ liability, the Court of Appeal’s findings have already reshaped the legal framework governing business energy agreements. The ruling enforces stricter disclosure requirements and holds brokers more accountable for their practices.
Victoria Myers, Director at specialist litigation firm Energy Solicitors Limited (ESL), hailed the decision as a “crucial moment in the ongoing battle against energy mis-selling.” She emphasized the increased responsibility on brokers to operate with transparency and the strengthened position of businesses in challenging unfair practices. “We will be right by their side to ensure they successfully do that,” she added.
Greater Transparency for Businesses
A key aspect of the ruling is the enforcement of informed consent. The court found that brokers can no longer make vague references to commissions or rely on industry norms to justify hidden fees. Instead, businesses must be provided with clear and specific information, including:
- The exact amount of commission being charged.
- How the fee affects the total cost of energy.
- The impact of the broker’s payment structure on contract recommendations.
This decision significantly curtails the ability of brokers to obscure their charges through ambiguous contractual language or generalized disclosures, reinforcing the requirement for openness in energy contract negotiations.
Brokers’ Defences Rejected
The Court of Appeal also dismissed common defences used by brokers and suppliers to justify hidden commissions. Arguments that clients should have assumed the existence of commissions based on market practices were rejected. Furthermore, the court ruled that brokers cannot use contractual clauses to avoid fiduciary responsibilities, reaffirming that they must act in the best interests of their clients.
ESL, which represents businesses affected by mis-sold energy contracts, estimates that firms could reclaim significant sums over the duration of their agreements. Myers cautioned that the rapid expansion of the still-unregulated energy broker market presents ongoing risks.
“With the broker market continuing to grow rapidly, this ruling provides a vital safeguard for businesses seeking fair and honest energy deals,” she said. “Running a business is hard enough without being misled into paying hidden commissions that inflate already high energy costs.”
A Turning Point for the Energy Broker Market
The ruling comes as the TPI market experiences rapid expansion. According to Cornwall Insight, the value of the intermediary sector has surged from £232 million in 2014 to £525 million in 2024. Despite their crucial role in arranging business energy contracts, many brokers operate without direct regulatory oversight, leading to conflicts of interest and widespread mis-selling.
Now, with the Court of Appeal setting clear standards for broker conduct, businesses have a stronger legal foundation to challenge past contracts and seek compensation for undisclosed commissions. This decision introduces much-needed clarity to a historically opaque sector.
In the absence of stricter regulatory measures, this ruling is viewed as a significant step toward protecting businesses and ensuring greater fairness in the energy market. It marks a turning point in the push for transparency and offers a potential financial lifeline to companies unknowingly overpaying for energy due to undisclosed broker fees.
