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| Version 1 | Version 2 |
|---|---|
| Energy firms 'must explain bills' | Energy firms 'must explain bills' |
| (about 1 hour later) | |
| Energy companies are failing to make monthly direct debit demands clear to customers, energy regulator Ofgem says. | Energy companies are failing to make monthly direct debit demands clear to customers, energy regulator Ofgem says. |
| But suppliers are not systematically getting bills wrong or collecting more money from direct debit customers than they should, said Ofgem in a report. | But suppliers are not systematically getting bills wrong or collecting more money from direct debit customers than they should, said Ofgem in a report. |
| Which? said its own research showed that many direct debits were too high, providing firms with free loans. | Which? said its own research showed that many direct debits were too high, providing firms with free loans. |
| But the watchdog Consumer Focus said it was reassured there was no evidence of systematic over-collecting. | But the watchdog Consumer Focus said it was reassured there was no evidence of systematic over-collecting. |
| "It will be reassuring to customers that there's no evidence of energy companies systematically over-collecting direct debit payments," said Audrey Gallacher of Consumer Focus. | "It will be reassuring to customers that there's no evidence of energy companies systematically over-collecting direct debit payments," said Audrey Gallacher of Consumer Focus. |
| "It's still the cheapest way to pay for energy, and spreading the cost over a year can be a convenient way to cope with large bills." | "It's still the cheapest way to pay for energy, and spreading the cost over a year can be a convenient way to cope with large bills." |
| Complaints | Complaints |
| More than 40% of all energy customers pay via direct debit. Many may be unclear about the correct level of direct debit to ensure they clear their tariff each month. | More than 40% of all energy customers pay via direct debit. Many may be unclear about the correct level of direct debit to ensure they clear their tariff each month. |
| Suppliers need to manage customers' direct debit payments much better, especially at a time when household budgets are under pressure Alistair Buchanan | Suppliers need to manage customers' direct debit payments much better, especially at a time when household budgets are under pressure Alistair Buchanan |
| The review was prompted by a series of complaints from customers who believed their monthly direct debit demands were set far higher than the actual amount of gas or electricity they used. | The review was prompted by a series of complaints from customers who believed their monthly direct debit demands were set far higher than the actual amount of gas or electricity they used. |
| But the regulator has given the big six energy companies a relatively clean bill of health. | But the regulator has given the big six energy companies a relatively clean bill of health. |
| "Our investigation found no evidence that suppliers are recovering more money from direct debit customers than they are due," said Ofgem chief executive Alistair Buchanan. | "Our investigation found no evidence that suppliers are recovering more money from direct debit customers than they are due," said Ofgem chief executive Alistair Buchanan. |
| However there was criticism of a "lack of transparency and poor communication" by suppliers as customers failed to understand why demands were being raised. | However there was criticism of a "lack of transparency and poor communication" by suppliers as customers failed to understand why demands were being raised. |
| "Suppliers need to manage customers' direct debit payments much better, especially at a time when household budgets are under pressure," Mr Buchanan said. | "Suppliers need to manage customers' direct debit payments much better, especially at a time when household budgets are under pressure," Mr Buchanan said. |
| Interest-free loans? | Interest-free loans? |
| Which? said the regulator had still not resolved the main problem of apparent overcharging. | Which? said the regulator had still not resolved the main problem of apparent overcharging. |
| "Last winter, we found that 70 per cent of accounts were in credit, with a quarter of people telling us that they had built up a credit of over £100 and, astonishingly, almost one in ten saying that it was more than £200," said James Tallack of Which? | "Last winter, we found that 70 per cent of accounts were in credit, with a quarter of people telling us that they had built up a credit of over £100 and, astonishingly, almost one in ten saying that it was more than £200," said James Tallack of Which? |
| "Allowing such large amounts to accumulate in the first place is unacceptable - even if the money is paid back eventually. | "Allowing such large amounts to accumulate in the first place is unacceptable - even if the money is paid back eventually. |
| "Suppliers need to play fair and stop effectively using their customers' money as 'interest-free loans'," he said. | "Suppliers need to play fair and stop effectively using their customers' money as 'interest-free loans'," he said. |
| Ofgem suggested that customers should regularly cross-check their meter reading with the bill, and go to their supplier with any concerns over direct debit levels. | Ofgem suggested that customers should regularly cross-check their meter reading with the bill, and go to their supplier with any concerns over direct debit levels. |
| New rules | New rules |
| The regulator also said companies must: | The regulator also said companies must: |
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| If they fail to do so, Ofgem is threatening to make the rules a condition of companies' licences, leading to fines if they broke the rules. | If they fail to do so, Ofgem is threatening to make the rules a condition of companies' licences, leading to fines if they broke the rules. |
| Direct debit demands are based on energy use over the previous year, including any price changes. | Direct debit demands are based on energy use over the previous year, including any price changes. |
| New customers' payments are based on a number of things such as the number of rooms or the number of people living in the property. | New customers' payments are based on a number of things such as the number of rooms or the number of people living in the property. |
| Suppliers will generally review direct debit payments twice a year, once at the six month mark and again on the anniversary date of becoming a customer. | Suppliers will generally review direct debit payments twice a year, once at the six month mark and again on the anniversary date of becoming a customer. |
| The company then has a statutory eight weeks to investigate. If it fails to do so, or the customer is not satisfied with the outcome, the case can go to the Energy Ombudsman. | The company then has a statutory eight weeks to investigate. If it fails to do so, or the customer is not satisfied with the outcome, the case can go to the Energy Ombudsman. |
| This referee then takes an independent look at the facts and can award compensation where appropriate. | This referee then takes an independent look at the facts and can award compensation where appropriate. |