Ofgem calls for changes to direct debit payments

Friday 27th March 2009

"Significant improvements" on how gas and electricity companies charge customers through direct debit were demanded today.

Ofgem has uncovered a number of complaints against the six major energy suppliers about the levels at which direct debit payments are set – leading some consumers to overpay or underpay and face sudden unexpected energy debts.

The regulator is now calling for new measures for direct debits to match usage more closely.

However, no evidence of systematic overcharging was discovered – but energy firms were rapped for not being clear on charges and how overpayments should be returned.

Alistair Buchanan, Ofgem chief executive, said: "Our investigation found no evidence that suppliers are recovering more money from direct debit customers than they are due.

"However, their explanations of the payment increases and their practices on refund policies are wholly inadequate."

He added: "Suppliers need to manage customers' direct debit payments much better, especially at a time when household budgets are under pressure."

Research by Which? points to large scale overpayment on energy bills.

The watchdog claims 64 per cent of electricity accounts and 69 per cent of gas accounts paid by monthly direct debit were in credit at their last bill or statement.

The average amount in credit was £74 for electricity and £84 for gas.

James Tallack, senior researcher at Which?, said: "While Ofgem's demands are a move in the right direction for consumers, we remain concerned about the size of credits that are being allowed to build up on some customers' gas and electricity accounts.

"Allowing such large amounts to accumulate in the first place is unacceptable - even if the money is paid back eventually. With household budgets already stretched to the limit, suppliers need to play fair and stop effectively using their customers' money as 'interest-free loans'."

Related News

<< Back To News Listings

News Article Search