£2m compensation bid launched as UK’s business energy claims market set to become ‘the new PPI’

L-R: Gerald Krasner, Jeff Winn.

Legal challenges are set to get underway to claim back more than £2million in compensation for businesses ripped off by energy brokers.

Sixteen cases from a new venture to recover hidden commissions included in business energy contracts are ready to go to court, with experts predicting the claims market will become ‘the new PPI’.

Among those seeking compensation for more than £200,000 in alleged mis-selling is Windermere School in the Lake District.

The cases and contract reviews are being led by a joint partnership between Gateshead-based energy management company PanoServe, which has recruited a team of energy professionals to investigate contracts, and Newcastle legal giant Winn Solicitors.

The PanoServe team includes former Leeds United chairman and chartered accountant Gerald Krasner.

The partnership has launched a no win, no fee contract review and challenge service for businesses across the UK, which is also designed to help companies decarbonise to achieve Net Zero.

Along with the 16 initial cases, agreements have been reached with more than 60 other companies and nearly 250 additional contracts are currently being investigated. Claim values of around £10million have so far been identified, and there is the possibility of class action in the years ahead.

By sector, the average claim value PanoServe has uncovered for clients is £240,000 among engineering firms, £160,000 in education organisations, £120,000 in sporting clubs, and £80,000 among hospitality companies.

Winn Solicitors is looking to hire more than 150 new employees to take the UK lead in the claims market, and PanoServe plans to take on 45 workers.

A guarantee is offered to clients they will receive a minimum 50 per cent of the compensation from any pay-outs, so businesses have nothing to lose and everything to gain.

More than a million businesses including charities, sports groups and care homes are thought to have been ripped off by energy brokers, as protections introduced in the residential market do not apply.

Around two-thirds of the annual £25billion 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 – with hidden fees which can leave firms out of pocket.

Just 5 per cent of businesses that have used a broker believed they were charged for the broker’s services, but many add commission on top of the supplier’s base price.

The charges have been particularly hard for businesses forced to close during the pandemic, such as B&Bs.

Energy firms have already had to pay out £389million in fines and redress payments over the last ten years – 25 per cent to the Treasury and 75 per cent in redress payments – but it is thought this is just the tip of the iceberg.

This month, Ofgem outlined proposals to force energy brokers to disclose how much commission they stand to earn.

Gerald Krasner, director of PanoServe, 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.

“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.”

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.  

“Miss-selling is very common. When we checked we were shocked to find we had been miss-sold.”

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 license 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.”

More information on PanoServe is available here: https://PanoServe.co.uk/ 

More information on Winn Solicitors is available here: https://www.winnsolicitors.com/