Ofgem has found failings in how major licenced energy suppliers charge customers via their direct debits. It has ordered five of the worst – TruEnergy, Good Energy, Ecotricity, Green Energy UK and Utilita – to make immediate improvements before August.
Released today, the regulator’s survey of seventeen major suppliers found that the five had ‘moderate to severe’ gaps in protocols governing how energy companies withdraw money direct from clients’ bank accounts.
Among the worst, lack of formally documented processes risk inconsistent or poor outcomes for consumers, leading to poor data collection and frustrated complaints.
The study found no evidence of unjustifiably high direct debits on home supply accounts. But the regulator is now ordering all suppliers who’ve increased their customers’ direct debits by more than 100% this year – around 500,000 accounts, Ofgem estimates – to review their processes.
Ofgem is urging that suppliers should conduct internal reviews, and offer unprompted refunds and goodwill payments.
The regulator’s research found that in the three months to April:
- 7 million consumers on standard variable tariffs (SVT) saw an increase in their direct debit
- The average hike was 62%. Most of this, says the regulator, reflects the increased cost of gas
- 8% of SVT customers – around 500,000 households- experienced an increase of more than 100%
The regulator is concerned at the last metric, and wants explanations from energy companies.
“it is for suppliers to ensure that direct debits are set correctly based on all relevant information available”, said Ofgem this morning, “and that they clearly communicate any changes in a way that helps consumers understand their payments”.
CEO Jonathan Brierley insisted; “Suppliers must do all they can, especially during the current gas crisis, to support customers and to recognise the significant worry and concern increased direct debits can cause”
Severest weaknesses were found in TruEnergy’s energy retailing directed at businesses.
It does not have a consistent and structured approach to setting customer direct debits, in the regulator’s opinion. Ofgem found “severe concerns” over the maturity of its processes, which could put consumers at a serious risk of inconsistent or poor outcomes. The regulator confirmed this morning that it is considering enforcement action against TruEnergy.
A second poorly performing licensee, UK Energy Incubator Hub ceased trading this month. Octopus has agreed to take over its 3,000 accounts.
Performance by a middle tier of seven operators – Bulb, E.ON, Octopus Energy, Outfox the Market, Ovo, Shell and Utility Warehouse – elicited lesser concerns for Ofgem.
The regulator identified gaps in their processes that could lead to consumers losing out. Absences of documented policies or guidance for staff, potentially not taking account of all relevant factors when setting limits on direct debits, or failing to act on triggers to re-assess them when appropriate, were concerns.
Ofgem said it has started compliance engagement with these suppliers to secure improvements.