A growing number of UK businesses are opening the post to find a demand for thousands of pounds in “lost commission” on an energy contract that never went live. If this has happened to you, the first thing to know is that receiving the letter is not the same as owing the money.
Why these letters land on your desk
When a business signs an energy supply contract through a broker, the broker earns commission once the contract goes live. If the contract falls through, some brokers argue the business is still liable to cover the commission they would have earned, based on terms buried in the original broker agreement.
Increasingly, these demands are not coming from the broker directly. They are being outsourced to third-party debt recovery firms, including PreAction and, more recently, SGS Enforcement, and can range from a few hundred pounds to more than £150,000.
The tactics used to pressure you into paying
Pre-action letters are built to look urgent. Expect references to court proceedings, a tight deadline, and a warning about interest or legal costs stacking up. The intention is to get you to pay before you’ve had the chance to check whether the claim actually holds up.
It doesn’t mean court proceedings have started, and it doesn’t mean the claim is valid. It means you have an opportunity to challenge it, and in many cases, that challenge succeeds.
Where these claims typically fall apart
The strength of a commission claim usually comes down to one question: was the commission term clearly disclosed and explained when you signed the original agreement? In practice, many businesses were never shown these terms in plain language, which weakens the broker’s case significantly.
A recent example: a claim brought by Utility Savings Group Limited went to trial and was dismissed by the judge, saving the business close to £4,000. It’s proof that these claims are not automatically enforceable simply because a letter says so.
What to do if you receive one
- Do not ignore it. Even an unreasonable deadline should be acknowledged.
- Do not pay before getting independent legal advice.
- Find the original broker agreement and any related correspondence.
- Get the enforceability of the commission clause checked before you respond.
How we can help
Business Energy Claims can introduce you to our panel law firm, who specialise in defending businesses against broker commission disputes. They offer a fixed-fee service covering a full review of your documents, clear advice on where you stand, and preparation of a formal response to the broker, with no hidden costs.
Get in touch
If you have received a broker commission demand, don’t assume you have to pay it. Contact Business Energy Claims today for an introduction to our panel law firm.