Business energy claims market: 'the new PPI'
Energy management company, Panoserve, and Winn Solicitors are set to launch claims worth millions
Energy management company, PanoServe, has recruited a team of energy professionals and Winn Solicitors to investigate mis-selling of business energy contracts.
The joint venture between Gateshead-based PanoServe and Newcastle-based Winn Solicitors is offering a ‘no win, no fee’ contract review and challenge service for UK businesses, also designed at helping organisations decarbonise to achieve net zero.
Former Leeds United chairman and chartered accountant, Gerald Krasner, is a director of Panoserve. He said: “The energy landscape is changing – businesses are facing challenges never seen before with rising energy costs and a need to reduce carbon emissions in an incredibly tough economic climate.
“The issue is that without regulations in place, brokers have been able to mis-sell energy contracts for decades.
“We’ve uncovered millions of pounds in mis-selling, and through our partnership with Winn Solicitors we’re now ready to embark on the legal process of reclaiming this money for businesses.
“The energy claims market will become the new PPI”.
More than a million businesses, including charities, sports groups and care homes, have potentially been “ripped off” by energy brokers, as protections introduced in the residential market do not apply to the private sector, say Panoserve and Winn.
They report around two-thirds of the annual £25bn cost of corporate gas and electricity deals are bought through brokers, but it is estimated that over 90 per cent of businesses may have been mis-sold their energy contracts.
Panoserve and Winn confirmed that 16 cases have been launched by businesses seeking to recover more than £2m in compensation from energy brokers for hidden commissions, agreements have been reached with more than 60 other companies and around 250 additional contracts are currently being investigated.
They state that claim values of around £10m have so far been identified, with the possibility of a future class action. The average claim value for clients is £240,000 among engineering firms, £160,000 in education organisations, £120,000 in sporting clubs and £80,000 among hospitality companies, says Panoserve.
Clients are guaranteed they will receive a minimum 50 per cent of compensation pay-outs.
Jeff Winn, chief executive of Winn Solicitors, said: “This is an exciting new venture to help businesses ripped off by unscrupulous business energy brokers.
“They have nothing to lose and everything to gain by allowing us to assess if they have been mis-sold and pursuing those responsible where they have.
“Mis-selling is very common. When we checked, we were shocked to find we had been mis-sold.”
Windermere School in the Lake District is pursuing a claim worth over £200,000.
Richard Hennah, operations manager of Windermere School, said: “Mis-selling of contracts and passing on of undeclared charges is an insidious practice that many customers are not aware of without further scrutiny of their contract and invoices.
“When you appoint a broker to act in your interest, you don't expect them to blatantly lie and pass on undeclared charges. Any other professional – a solicitor, surveyor or accountant for example - would lose their licence and be unable to trade.
“I was told by our broker that they represented a collective procurement basket made up of schools to deliver savings, and that our unit costs would be frozen for a fixed three-year term at prices competitive to our existing contract.
“It turns out no procurement basket exists and that although the unit price is frozen there are undisclosed charges added that amount to a significant increase.”
Earlier this month, Ofgem outlined proposals to make details of broker commissions more transparent.
Krasner concluded: “Complex contracts and bills needed to be simplified, hidden charges and costs need to be made transparent, and temporary fixes need to be made sustainable.
“Our aim is to help businesses fully understand their energy profile, explaining costs, consumption, and carbon reduction so that we can all live in a greener, cleaner world.”
Winn Solicitors is looking to hire more than 150 new employees to take the lead in the claims market, while PanoServe plans to recruit 45 workers.