Martin Lewis has warned people to be wary after receiving complaints that energy companies are doubling customer direct debits. The financial expert spoke as a witness during the UK Government's business, energy and industrial strategy committee at around 10.30am on Tuesday.
He said: "There were worrying issues of companies increasing people's direct debits disproportionately to the rate that's being increased - even for those in credit. There is no reason to double someone's direct debit when they're in credit and the price cap is going up 54%. That's not mathematically sound and that's a breach of licensing conditions.
"And I have been very concerned that a number of companies are doing it to improve their own cash flow situation at the expense of their own customers and we would like to see the regulator crack down on that quite substantially." Martin told the parliament committee he did not have the names of specific companies doing this to customers to hand. However, he said the issue was happening "across the board".
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He said: "This is a market wide system....Companies are seeing this price change as an opportunity to crystallise a change in payment and it is right across the board for all companies...therefore, consumers have to be wary.....The sheer volume of complaints I'm getting on that basis indicates to me this is systemic market wide, rather than individual supplier led."
Although the issue has already affected many households, according to Martin, he said many people will not have the tools to be able to handle the situation. He called for a crack that down on the energy firms doing this to customers.
However, Martin said currently the energy regulator, OfGem, is under resourced to deal with the number of issues with the market at the moment. "There's so much going on in the energy market and OfGem is under resourced to deal with the number of companies gone bust and what's happening in the energy market. The amount of playing fast and loose that seems to be going on is huge right now," he said.
During the committee, Martin also raised a number of other worrying tactics used by energy companies in the last few months. He said: "There are issues of people being owed credit and not getting it [and] one of the concerns is many of the companies are putting out incredibly expensive fixed tariffs and then writing to their customers as if they have no choice but to move on to the fixed tariff and move off the price cap. While there are some fixes that are worth getting, there are no open market fixes that are worth getting right now." He said it's important for customers to remember there is no competition in the energy market right now and that nobody can switch.
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