Half a million Brits could receive refunds after Ofgem discover direct debit errors

Ofgem has told several energy suppliers to take “immediate and urgent action”

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Ofgem has told a number of energy suppliers to take “immediate and urgent action” after finding a range of weaknesses or failings in the way they charge customers direct debits.

The regulator found five suppliers – Ecotricity, Good Energy, Green Energy UK, Utilita Energy and TruEnergy – had moderate to severe weaknesses ranging from inadequate processes to an overall lack of a structured approach to setting customer direct debits.

UK Energy Incubator Hub (UKEIH), which has ceased trading, also had severe weaknesses and did not have a consistent and structured approach to setting direct debits, Ofgem said.

The watchdog has now ordered all energy suppliers to review the accounts of all customers whose direct debit was increased by 100 percent or more between February and the end of April, involving some 500,000 households.

Ofgem has told a number of energy suppliers to take “immediate and urgent action”
Ofgem has told a number of energy suppliers to take “immediate and urgent action”

Out of a total of 17 large suppliers in the market, the majority were found to only have minor issues.

Suppliers with no significant issues found were British Gas, EDF, ScottishPower and So Energy.

The second group, with minor weaknesses, consisted of Bulb, E.ON, Octopus Energy, Outfox the Market, Ovo, Shell and Utility Warehouse.

Ofgem said that, as a result of the “initial snapshot” of findings, the suppliers affected will now have to submit action plans within two weeks to set out how they will take the required action.

Where appropriate, Ofgem said it also expects suppliers to adjust any miscalculations, including making repayments if needed, and consider whether a goodwill payment is warranted.

The review found that more than seven million energy consumers on a standard variable tariff (SVT) saw an increase in their direct debits between February and April 2022.

The regulator found five suppliers – Ecotricity, Good Energy, Green Energy UK, Utilita Energy and TruEnergy – had moderate to severe weaknesses in the way they charge customers direct debits
The regulator found five suppliers – Ecotricity, Good Energy, Green Energy UK, Utilita Energy and TruEnergy – had moderate to severe weaknesses in the way they charge customers direct debits

On average, direct debit levels for customers on an SVT increased by 62 percent in this period, most of this reflecting the increased cost of gas.

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.”