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Commission disclosure in UK energy contracts denotes the mandatory requirement for energy suppliers to reveal fees paid to third-party intermediaries like brokers before business customers sign agreements. From October 2024, new regulations require all non-domestic suppliers to display broker commissions and intermediary fees as principal contract terms, presented in pence per kWh format.
This transparency measure addresses historical issues where commissions ranging from 9% to 31% of unit pricing remained hidden, sometimes accounting for up to 50% of total contract expenses. Understanding these disclosure requirements helps businesses identify hidden costs and investigate recovery options for undisclosed commissions.
Energy brokers frequently receive substantial fees from suppliers without disclosing these arrangements to business customers, embedding hidden costs directly into energy contracts.
These commissions become woven into pricing structures, making detection difficult for consumers who remain unaware of ongoing monthly charges. Commission percentages can range from 9% to 31% of unit pricing, creating considerable accumulated costs over contract durations.
Half-secret commissions occur when businesses know brokers receive payment but remain uninformed about specific amounts or payment structures.
Half-secret commissions leave businesses aware brokers receive payment whilst deliberately concealing the actual amounts and payment structures involved.
This practice proves particularly problematic because brokers position themselves as trusted advisors whilst earning undisclosed financial incentives from recommended contracts.
Such arrangements create conflicts of interest that undermine the fiduciary relationship between broker and client. Brokers have a disclosure obligation to inform customers about commission amounts and calculations. Data integration that reveals usage, standing charges, and contract terms can help businesses identify these hidden costs and make more informed procurement decisions. Ultimately, this leads to businesses paying considerably more than necessary for energy services.
The October 2024 regulations introduced mandatory disclosure obligations that fundamentally altered how energy suppliers present contract terms to non-domestic customers.
Suppliers must now display all third-party intermediary fees as principal contract terms rather than supplementary information, with specific formatting requirements that vary by customer category.
These transparency measures place full compliance responsibility on energy suppliers, who must report third-party intermediary (TPI) fees in pence per kilowatt-hour for larger businesses and as total contract costs for microbusinesses.
The new rules extend protections to small businesses with fewer than 50 employees, ensuring these organisations receive the same transparency benefits as larger enterprises.
Under compliant procurement processes, brokers provide upfront commission disclosure before contracting begins, eliminating surprises and building trust with business clients.
Since 1 October 2024, all non-domestic energy suppliers operating in the United Kingdom must disclose broker fees and intermediary commissions within their contract principal terms. This marks a fundamental shift from voluntary to mandatory transparency practices.
These requirements apply universally across business sizes, eliminating previous consumption-based exemptions. Suppliers must present Third Party Costs in standardised pence per kilowatt-hour format, ensuring comparable pricing structures.
Non-compliance triggers regulatory penalties under Ofgem’s Standard Licence Conditions 20.6 and 20.7. Energy consultants serving Small Business Consumers must register with an Alternative Redress Scheme by 1 December 2024, pending legislative approval.
| Disclosure Element | Format Requirement | Scope |
|---|---|---|
| Broker Fees | Pence per kWh | All contracts |
| Third Party Costs | Principal terms | Electricity and gas |
| Commission Structure | Clear visibility | Mandatory incorporation |
Customers maintain statutory rights to request detailed intermediary cost breakdowns upon demand.
From October 2024, regulatory requirements mandate distinct reporting formats based on customer classification, fundamentally altering how Third Party Intermediaries present commission structures.
Non-microbusiness customers receive TPI fees displayed as cost-per-unit measurements within supply contracts, providing clarity on rate impacts in pence per kWh or £ per MWh.
Microbusiness customers view fees as total costs across entire contract durations, offering straightforward expense visibility in £ amounts.
These differentiated approaches reflect customer size definitions aligned with government Small Business classifications following Energy Ombudsman expansion.
Brokers must disclose commission uplifts before contract execution across all business segments.
Full transparency requirements apply to micro and small businesses prior to signing, though obligations extend to all non-domestic customers regardless of size category.
Pre-contract disclosure timing enables informed commitment decisions, whilst contractual arrangement types—whether bilateral agreements or Letter of Authority configurations—determine specific regulatory framework applications under UK energy regulations. The regulations address longstanding concerns about hidden or inflated broker fees that have historically impacted business energy costs.
Energy brokers operating in the UK market face complex legal obligations that extend beyond contractual terms, particularly where fiduciary relationships arise with their customers. Courts have established that brokers can owe fiduciary duties even when agreements attempt to negate agency relationships.
Fiduciary status emerges when undertaking to act for another in circumstances creating trust and confidence.
| Disclosure Requirement | Legal Standard |
|---|---|
| Commission existence | Must disclose to customers |
| Commission quantum | Not always required for sophisticated parties |
| Informed consent | Necessary to avoid half-secret commission liability |
| Trade customs | May obviate disclosure needs in established practices |
The scope of disclosure obligations varies based on customer sophistication and bargaining power. Energy suppliers may face accessory liability if dishonestly involved in broker commission breaches. Where commission is funded by supplement on unit price, this method has been recognised as consistent with common industry practice. These obligations remain paramount regardless of commission amounts, whether involving thousands or millions of pounds.
The October 2024 regulatory structure established distinct commission disclosure formats based on customer classification.
Microbusinesses receive broker fees displayed as total contract cost, providing visibility into the aggregate financial impact throughout the contract period.
Non-microbusinesses receive commission information in cost-per-unit format, enabling larger organisations to calculate fees relative to their consumption patterns and compare supplier alternatives more effectively.
This transparency requirement helps businesses understand broker-provider relationships and make more informed decisions when selecting energy contracts.
Understanding commission disclosure requirements across different business classifications remains crucial for energy consumers navigating UK regulatory frameworks.
Microbusinesses receive commission information presented as total cost in pounds sterling payable throughout the complete contract period. This format delivers absolute monetary values instead of percentages or per-unit calculations. The disclosure must happen before contract execution, allowing informed decision-making.
October 2024 regulatory changes preserved existing microbusiness requirements whilst extending obligations to larger commercial entities. Non-microbusiness customers must now receive cost disclosures in pence/kWh format.
| Business Category | Disclosure Format | Implementation Date |
|---|---|---|
| Microbusiness | Total cost (£) over contract duration | Pre-October 2024 |
| Non-Microbusiness | Improved itemised disclosure | October 1, 2024 |
| Northern Ireland | UREGNI-specific regulations | Separate timeline |
Ofgem investigations uncovered commissions accounting for up to 50% of total contract expenses. These findings validated the necessity for enhanced transparency measures.
Since 1 October 2024, non-microbusiness customers receive commission disclosures in a fundamentally different format than their microbusiness counterparts.
Energy suppliers must present TPI fees as “cost per unit” rather than aggregate contract totals, prioritising per-unit pricing transparency over total cost presentation.
This methodology enables non-microbusiness customers to calculate commission impact across varying consumption volumes.
The regulatory structure under Ofgem’s Non-Domestic Market Review establishes distinct disclosure standards based on business size classification.
Whilst microbusinesses require full disclosure before contract signing, non-microbusinesses face different timing requirements and expanded Standards of Behaviour protections.
Suppliers demonstrate varying approaches to displaying TPI commissions on contracts, reflecting the absence of standardised presentation formats.
Contract documentation must now accommodate category-specific disclosure mechanisms, requiring brokers to update sales processes accordingly.
Multiple layers of statutory protection shield UK energy consumers from unfair commercial practices and inadequate service delivery.
The Consumer Rights Act 2015 mandates that energy services must be performed with reasonable care and skill, within reasonable timeframes, and at fair prices when not pre-agreed.
Suppliers must remedy service failures through repeat performance or price reductions up to 100%.
The Consumer Protection from Unfair Trading Regulations 2008 provide three critical redress rights: unwinding contracts entered through misleading information, obtaining discounts for unfair commercial practices, and claiming damages for losses from aggressive practices.
Energy suppliers face legal consequences for false trade association membership claims.
The Consumer Contracts Regulations 2013 grant consumers a 14-day cancellation period for off-premises and distance energy contracts, requiring thorough pre-contractual information disclosure.
The evolution of commission transparency in UK energy contracts has been greatly influenced by judicial decisions addressing broker disclosure obligations.
Windermere School’s £200,000 settlement with British Gas highlighted the financial magnitude of undisclosed commission disputes and spurred increased scrutiny of broker arrangements.
Expert Tooling v Engie Power Limited established that partial disclosure of commission rates, even when customers were informed that commissions would be paid, failed to meet the informed consent standard required under fiduciary law.
Hidden commission practices within the UK energy brokerage sector came under intense scrutiny following Windermere School’s successful legal challenge against mis-selling tactics. The educational institution uncovered energy brokers had secured substantial commissions without proper disclosure, violating fundamental transparency principles.
This case established critical precedents regarding broker obligations and client rights in commercial energy contracts.
| Case Element | Impact |
|---|---|
| Settlement Amount | £200,000 awarded to Windermere School |
| Key Issue | Undisclosed broker commissions embedded in contracts |
| Legal Precedent | Strengthened disclosure requirements for energy brokers |
| Industry Response | Improved transparency standards across the sector |
The settlement reinforced expectations that brokers must clearly communicate all commission arrangements before contract execution.
This landmark decision prompted widespread industry reforms. Energy intermediaries were urged to implement thorough disclosure protocols protecting commercial clients from hidden charges.
Following Windermere School’s settlement, another significant challenge emerged when Expert Tooling and Automation Limited pursued legal action against energy supplier Engie Power Limited over undisclosed commission arrangements orchestrated by broker Utilitywise plc.
Between 2016 and 2017, Utilitywise sold five electricity supply contracts containing 5p uplifts, receiving commission from Engie embedded within unit prices.
The Court of Appeal determined Utilitywise breached fiduciary duties despite partial commission disclosure.
The court ruled that Expert Tooling had not provided informed consent. The judgement established that proper disclosure requires revealing specific commission amounts, calculation methods, and additional arrangements such as Engie’s agreement to pay £11.5 million for meeting sales targets.
Though Expert Tooling’s appeal was dismissed, the Court granted permission for Supreme Court review on key issues.
Since 1 October 2024, energy suppliers must disclose all fees paid to Third Party Intermediaries (TPIs) as part of non-domestic supply contracts, marking a significant shift towards transparency in the UK business energy market.
These commissions are incorporated through a small uplift in contract costs rather than direct customer payments. The disclosure format varies by customer type, with microbusinesses receiving total contract cost information whilst non-microbusinesses see fees displayed as cost per unit in pence per kWh.
Different customer categories follow specific disclosure requirements. Transparency obligations apply across all non-domestic arrangements.
| Customer Type | Fee Display Format | Disclosure Method |
|---|---|---|
| Microbusiness | Total contract cost | Welcome Letters, PDF documents |
| Non-microbusiness | Pence per kWh | Contractual principal terms |
| Direct arrangements | No broker fees | Not applicable |
| All non-domestic | Must be provided | Upon customer request |
| Small business contracts | TPI must use qualifying dispute scheme | Mandatory compliance |
Business energy contracts often conceal commission payments within unit rates and contract terms, making them difficult for customers to detect without careful scrutiny.
Commission details typically appear buried deep within terms and conditions rather than prominently displayed. Brokers may obscure amounts by declaring rates in pounds per kWh instead of standard pence per kWh format. This causes unit rates to increase from 12 pence to 13 pence per kWh due to embedded charges.
Half-secret commissions occur when customers know fees exist but lack specific amounts or structure details. Fully secret commissions involve complete non-disclosure.
Contract recommendations may prioritise broker financial incentives over customer needs. Third-party charges for services like metre readings or maintenance may contain undisclosed commission elements.
Add-on services often include hidden charges that are not clearly communicated to business customers.
The Office of Gas and Electricity Markets (Ofgem) serves as the primary regulatory authority responsible for enforcing transparency standards across the UK energy market, with considerably expanded powers taking effect from October 2024.
Ofgem possesses enforcement capabilities including financial penalties for licence breaches, consumer compensation orders, and mandatory service modifications for non-compliant companies.
The regulator monitors wholesale energy trading through organised marketplace data and requires firms to report suspicious transactions promptly.
Staff training requirements guarantee proper identification of market manipulation and inside trading.
Ofgem mandates suppliers implement appropriate complaints processes by December 2024 and collaborate exclusively with brokers holding recognised redress scheme memberships.
These enforcement mechanisms emerged from the Micro-Business Strategic Review, addressing hidden fees, unfair practices, and poor customer service throughout non-domestic energy markets.
When energy customers reveal they have paid undisclosed commissions embedded within their contract rates, UK law provides specific remedies and recovery mechanisms.
However, strict time limitations govern when claims may be brought. The standard limitation period extends six years from contract date. This was demonstrated when Expert Tooling v Engie ruled claims time-barred after six years and seven weeks.
Section 32 Limitation Act 1980 may extend this period where deliberate concealment occurs. Courts require proof of intention to conceal.
Successful claims enable recovery of entire commission amounts plus interest calculated in £. Courts have ordered brokers to refund undisclosed commissions for breaching Consumer Rights Act 2015 and FCA rules.
Where brokers enter administration, customers may pursue recovery claims directly against energy suppliers.
