From regulatory reform to legal accountability: The new landscape for business energy contracts

The business energy market is undergoing a quiet but significant reset. What was historically treated as an operational procurement decision is now being reclassified as a financial and governance risk. However, the widespread use of intermediaries, combined with limited transparency around commission, created a market in which pricing and informed consent were absent. Over the last five years, regulatory intervention and judicial scrutiny have emerged, reshaping the framework through which both future contracts and historic arrangements are now being assessed.

This article is relevant to professionals who regularly encounter business energy contracts in the course of advising organisations, including those involved in overseeing SME and wider commercial support. It provides clarity on how historic brokered energy arrangements are now being assessed following regulatory reform and recent judicial scrutiny, helping identify where existing or historic arrangements may give rise to legal, financial or governance risk and warrant closer examination.

Ofgem’s intervention

Ofgem’s intervention in the non-domestic energy market was not a blanket reform but a series of measured steps, each responding to an identified market failure. Prior to 2021, the business energy market operated in way that systemically inhibited informed consent. Businesses routinely entered long-term non-domestic energy contracts without clear visibility of how pricing was structured or how intermediaries were remunerated through broker commission arrangements. Commission was frequently embedded within unit rates without meaningful disclosure, undermining price comparability and distorting intermediary incentives.

The result was a market in which businesses, particularly SMEs, were unable to assess the true cost of supply or whether brokers were acting in their best interests. This lack of transparency constrained informed financial decision making and created an imbalance between businesses, suppliers and intermediaries.

How regulatory expectations have shifted

From October 2021, Ofgem began introducing targeted reforms focusing on enhanced protections for micro-businesses. These changes marked a decisive shift towards transparency at the point of contracting and formal recognition of commission disclosure as a consumer protection issues rather than a commercial norm.

The regulatory approach has since broadened. From April 2024, disclosure obligations were extended to all non-domestic customers, alongside wider consumer protection requirements that prohibit the omission of material information. Transparency and fair treatment are now embedded as baseline regulatory expectations across the business energy market.

Taken together, these reforms represent a clear recalibration of regulatory standards. However, they operate prospectively. Whilst they strengthen expectations going forward, they do not resolve the position of the businesses bound by contracts pre-dating regulatory changes, leaving historic arrangements to be assessed by the courts.

Legal accountability and the role of Expert Tooling

While regulatory reform looks to the future, disputes arising from business energy contracts pre-dating those changes fall to be determined by the courts. For businesses whose contracts pre-date Ofgem’s reforms, judicial scrutiny has become the primary mechanism for assessing whether historic commission structures were lawful and whether informed consent was properly obtained.

The conclusion of Expert Tooling and Automation Limited v Engie Power Limited represents a significant legal development. The appeal was allowed and the cross-appeal refused, clarifying the approach to historic commission arrangements and the scope of supplier and intermediary liability within the context of non-domestic energy supply. Read our in-depth commentary on the determination of Expert Tooling here.

The legal principles applied in Expert Tooling sit alongside the Supreme Court’s decision in Hopcraft v Close Brothers Ltd, which provides important context to the nature of the relationship and quality of disclosure. In the business energy market, where brokers may act in a fiduciary capacity, the critical question is whether businesses gave fully informed consent to the commission arrangements. Absent disclosure of the material features of that arrangement, including the amount or method of calculation and whether commission was embedded within unit rates, the commission structure is vulnerable to challenge. Where fiduciary relationships exist, informed consent is a central requirement rather than a procedural formality. This is now the industry standard.

How the court now assess historic contracts

In that context, Expert Tooling does not add a new legal test but clarifies how those principles are applied in the business energy context. This case underscores that liability will turn on the substance of what was disclosed in practice, rather than generic references to commission or reliance on historic industry norms.

What this means for you

Ofgem’s reforms have reshaped expectations across the business energy market, setting clearer standards for transparency and fair treatment going forward. They do not, however, resolve the position of businesses bound by contracts entered into before those standards were brought into force.

What has changed is how those historic contracts will now be judged. The conclusion of Expert Tooling and Hopcraft confirms that historic liability turns on evidence of disclosure, not assumptions about market practice or partial references to commission. The practical distinction between secret and half-secret commission is no longer determinative. What matters now is whether businesses are given sufficient information to provide fully informed consent to commission structures.

For businesses reviewing historic energy contracts, the focus has moved decisively away from regulatory compliance and towards evidential scrutiny of what was disclosed at the point of contracting. This has become a governance and risk management issue as much as a legal one. Generic disclosure and reliance on historic industry standards are unlikely to provide protection to intermediaries and suppliers, particularly where the mechanics of commission, pricing, and broker incentives were not properly explained or documented in a way capable of withstanding judicial .

As scrutiny continues to sharpen, now is the appropriate point for businesses to revisit brokered energy arrangements, test what was disclosed in practice, and consider whether those contracts remain defensible from a legal, financial and governance perspective.