Energy regulator Ofgem has told “a number” of energy suppliers to take immediate and urgent action, after a review found a range of weaknesses or failings in the way they charge customers direct debits.
Suppliers who Ofgem identified as having “moderate to severe weaknesses” are Ecotricity, Good Energy, Green Energy UK and Utilita Energy.
Weaknesses ranged from inadequate processes and weak governance and controls, to “an overall lack of a structured approach to setting customer direct debits”.
Ofgem said it was concerned that in some cases this could lead to customer direct debits being set incorrectly, or not being evaluated for a long time, which can cause the build-up of either unnecessarily large credit balances or debt, depending on whether the customer is under or overpaying.
Ofgem said it was starting compliance engagement with these suppliers to drive “rapid and robust improvements to processes and reassess customer direct debits where necessary”, adding that if these suppliers did not take action fast enough it would consider enforcement action.
TruEnergy and UK Energy Incubator Hub (UKEIH) also had severe weakness, Ofgem said.
In both cases the suppliers did not have a consistent and structured approach to setting customer direct debits.
Ofgem said: “To this end, we are considering whether enforcement action is warranted. Since the findings were made, UKEIH have ceased to trade and so we will not pursue any further action against them.”
Ofgem 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.”
