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British Gas turns up heat on brokers
Sunday, September 21, 2008
[Business Cost Consultants are NOT brokers. We are "consultants" meaning that we do not take commissions from the energy suppliers.]
British Gas looks set to lift the lid on the secretive energy supply market to businesses by making it compulsory for brokers to declare the commission they are paid to woo customers.
British Gas looks set to lift the lid on the secretive energy supply market to businesses by making it compulsory for brokers to declare the commission they are paid to woo customers.
The move follows last week's revelation by Financial Mail that tens ofms of pounds a year are paid to 'independent' brokers by energy suppliers to draw in lucrative deals with small or medium-sized companies. These payments are rarely declared, leading to claims the market is effectively rigged.
British Gas says it stopped using brokers three months ago, though some in the market say agents for the company are still operating. The group says it will start using brokers again at the end of the year, on condition they tell customers how much commission they are paid.
'If this is correct it is a massive breakthrough that others will find hard not to follow,' one senior energy buyer told Financial Mail.
'Why is this industry so different from insurance and mortgages where, I believe, non-disclosed commissions are illegal?'
Worries that brokers sign business customers to the energy provider paying the highest commission, without-disclosing such payments, means there must be market clarity, British Gas said. 'Customers should know what they are paying,' said a spokesman. 'We encourage business users to ask and, if the broker will not disclose this, to question why.'
Attempts to introduce clarity are hampered by the lack of regulation in the market.
EDF Energy said only that it 'complies with all legal regulations regarding brokers' fees'. Total Gas & Power, Scottish & Southern Energy, and Biz Energy all declined to comment.
This article was featured on ThisIsMoney.co.uk.
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