Are You Aware Of The Dangers When Securing an Energy Contract?

The Nationwide team has been helping customers whose existing brokers’ terms and conditions expose them to huge risks .

The common elements are

• Agreeing a renewal contract up to 2 years before the current contract ends.

• Contracts lasting 3–4 years.

• Contract rates much higher than were available at the time or now.

Two examples are as follows

• During the energy‑price peak, a customer agreed to a 4‑year electricity contract at 78 ppkw .

• In December 2023, another customer agreed to a 44‑month contract at 43 ppkw when average prices were 24–30 ppkw.

Brokers may include clauses in their terms stating that if the contract doesn’t go live they can claim their entire commission or another fee. Such charges can range from several thousand pounds to tens of thousands for large supplies.

Our duty to customers

Nationwide, as your trusted partner, has a duty of care to customers. They want to quantify potential risk or loss and ask customers to confirm the existence of punitive clauses before offering alternative contracts. Staying with your existing supplier may be cheaper, but you must consider these charges up front.

Key concerns

• Disclosure of commission and penalties: Contracts may be invalid when brokers fail to disclose their commission or penalties.

• Regulations since October 2022: From 1 October 2022, brokers arranging energy contracts must disclose commission to customers.

• Supplier responsibility: Suppliers must ensure they and any third‑party intermediaries disclose commissions on customer bills.

Customers should be aware of these dangers when agreeing to energy contracts and consider whether the contract terms put them at risk. For further guidance, contact Nationwide Energy Consultants.