Over 1,300 catering businesses have united in a £2 billion legal challenge against energy companies allegedly responsible for inflating customers' bills through covert payments to third-party brokers.
According to Harcus Parker, the law firm leading the charge, these undisclosed commissions may have resulted in increased costs for nearly two million businesses and organisations across the UK.
In response to this issue, the law firm is gearing up to initiate a collective legal action to seek recompense for these commissions. Earlier this year, they communicated with various energy firms regarding their intentions.
Of the 5,000 businesses currently involved in the claim, it's been reported that 850 businesses are restaurants and cafés, 262 are takeaways, 175 are pubs and bars, and 58 are hotels.
Damon Parker, senior partner at Harcus Parker, commented:
"The catering industry has had to face very difficult trading conditions in recent times and we are very aware that energy costs have been a major cause for concern.
We hope that by returning some of these secret broker fees we may be able to alleviate some of the financial burden that businesses are suffering.
Catering businesses tend to be heavy consumers of energy so if they have paid undeclared broker commissions stretching back a number of years they can expect to claim back thousands of pounds.
We are delighted that so many businesses from the catering industry have joined the claim.
There's been a huge acceleration in the amount of companies that have signed-up to the legal claim in the past week and we're keen to continue that momentum."
Harcus Parker has garnered participation from businesses spanning various sectors, including large manufacturers, high street stores, sports clubs, community organisations, faith groups and charities.
Findings from research conducted by the law firm reveal that one energy supplier offered brokers commissions as high as 10p/kWh, which were subsequently added to customers' bills without their awareness. Additionally, several energy suppliers were discovered to have provided brokers with undisclosed commissions ranging from 1p to 3p/kWh.
It was only in October 2022 that industry regulator Ofgem mandated brokers to disclose their commissions to "micro-business" customers, defined as firms with a turnover of less than £1.8 million.
Separately, law firm JMW Solicitors and Sacha Lord, night-time economy adviser for Greater Manchester, are initiating another legal action on this matter, with Lord characterising it as a "David vs Goliath moment."
As energy companies faced criticism for their actions during price increases over the winter, Ofgem has come under mounting pressure to take decisive action in response. UKHospitality expressed its disapproval, deeming the conduct of some firms as "disgraceful."
An Ofgem spokesperson said:
“We recognise the harm that can be caused to small businesses when they are not made fully aware of how much they could pay within their energy bill to a third-party energy broker."