Ofgem orders energy suppliers to act urgently over direct debit ‘failings’

Weaknesses in energy companies’ processes could lead to customers building up huge credit or debt balances  (PA Wire)
Weaknesses in energy companies’ processes could lead to customers building up huge credit or debt balances (PA Wire)

Energy regulator Ofgem has told “a number” of energy suppliers to take immediate action over customers’ direct debits.

It comes after the watchdog’s review found a range of failings in the way customers are charged for their gas and electricity.

Ofgem identified Ecotricity, Good Energy, Green Energy UK and Utilita Energy as having “moderate to severe weaknesses” such as inadequate processes, weak governance and controls, and “an overall lack of a structured approach to setting customer direct debits”.

TruEnergy and the now-defunct UK Energy Incubator Hub (UKEIH) also had severe weaknesses, Ofgem said.

In some cases, the weaknesses could lead to customer direct debits being set incorrectly, or not being evaluated for a long time, which could cause the build-up of large credit balances or debt, Ofgem said.

The regulator said that urgent action must be taken to improve their processes and “reassess customer direct debits where necessary”.

It said it would consider taking action against the companies if changes were not made quickly enough.

It comes as the prices of gas and electricity have hit all-time highs, partly because of the ongoing Russian invasion of Ukraine.

Ofgem said: “To this end, we are considering whether enforcement action is warranted. Since the findings were made, UKEIH has ceased to trade and so we will not pursue any further action against them.”

The watchdog’s chief executive Jonathan Brearley said: “We know how hard it is for energy customers at the moment, so it’s crucial that the amount they pay each month in direct debits is right so they can manage their money.

“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.

“We know there is some excellent service out there, but we want to make sure that it’s consistent and standard across the board. It’s clear from today’s findings on direct debits that there are areas of the market where customers are simply not getting the service they need and rightly expect in these very difficult times.

“Today’s findings show that with the urgent changes we are now expecting, the current system will be much fairer for consumers.

“Bringing down the price of gas is not in Ofgem’s control; however, we will do all we can to have a fair system and ensure suppliers look after their customers.”

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