Some energy suppliers are increasing direct debit payments to customers by more than necessary and must be explained within three weeks or punished, the government said.
Comments from business secretary Kwasi Kwarteng follow reports that rising energy costs have led some customers to receive requests that double or even triple their monthly payments.
On 1 April, the Ofgem energy price cap rose by 54% – or almost £ 700 – to £ 1971 a year, with prices expected to rise again later this year.
Two weeks later, Ofgem CEO Jonathan Brierley said he saw “worrying signs” that some companies were allowing customer service levels to deteriorate, with concerns that some “may have increased direct payments.” debit with more than necessary, or direct customers to tariffs that may not be in their interest ”.
He said the regulator was commissioning a series of “market compliance reviews” that would include “tighter oversight of how direct debits are handled” by suppliers.
On Tuesday, Kwarteng said it had been found that companies were operating incorrectly. He tweeted: “Some energy suppliers are increasing direct debits beyond what is needed. I can confirm that @Ofgem is publishing compliance reviews today. Suppliers have three weeks to respond. “
He added: “The regulator will not hesitate to enforce compliance quickly, including imposing significant fines.
In March, consumer expert Martin Lewis told lawmakers that some energy companies were using unfair and potentially illegal tactics to secure cash at the expense of their customers.
Lewis said some of the increases in direct debits could violate the licensing conditions of energy companies.
“Many companies do this to improve their own cash flow position at the expense of their customers,” he added.
Ofgem recently put forward proposals to tackle the misuse of customer credit balances. Last month, Brierley said some providers had used the money “to sustain their finances, allowing them to pursue riskier business models.” He added: “Customer credit balances should only be used to reconcile accounts and not as a source of risk-free capital.
On April 1, energy suppliers were allowed to increase their variable gas and electricity tariffs to the new maximum. Almost all households are already on these limited gas and electricity tariffs – a total of about 22 million.
Add Comment