Suppliers must improve on direct debitsRegulator criticises poor communication

27 March 2009


Gas prices have risen by 33.8% in the last 12 months

Gas and electricity regulator Ofgem has demanded improvements in the way that energy suppliers deal with direct debit payments from customers.

In a report published today, the regulator said that its investigation into direct debits found that a lack of transparency and poor communication has left customers struggling to understand why they are being asked to pay more, especially when they may already be in credit on their account.

The regulator also said it was concerned about refund policies and wants suppliers to do more to make the grounds for refunds clearer and to give consumers more choice on how their credit balances should be used or repaid.

Common problem

On Wednesday, Which? Money magazine published the results of its latest energy supplier satisfaction survey, which identified issues with direct debits as the most common problem that customers had had with their energy supplier over the previous 12 months.

The consumer group also expressed concern about the size of credits that were being allowed to build up on some direct debit customers’ accounts. When it asked customers in November whether they were in credit or debt with their supplier at the time of their last bill, almost seven in ten said they were in credit, with one in four more than £100 and one in ten more than £200 in credit.

However, Ofgem said that it had found no evidence that suppliers are over-recovering or that there are systematic errors in the payments they are requesting. The Energy Retail Association, which represents suppliers, said that it hoped the report would ‘lay to rest customers’ concerns about this payment method’.

Interest free loans

James Tallack, senior researcher at Which?, said: ‘Ofgem’s report has found that, over the course of a year, suppliers took no more money from customers than was required for the gas and electricity used. But this figure includes refunds made to customers during that period, so it seems that unnecessarily large credits are still being allowed to build up in customers’ accounts.

‘In May last year, we found that almost half of direct debit customers were in credit, with almost one in five in credit more than £100. When we checked again in November, we found that seven in ten were in credit and, for one in four of them, the credit exceeded £100.

‘Even if the money is paid back eventually, allowing such large amounts to accumulate in the first place is unacceptable. With household budgets already stretched to the limit, suppliers need to play fair and stop effectively using their customers’ money as interest-free loans.’

Simpler billing

Which? is campaigning for regulator Ofgem, the government and suppliers to ensure that there’s simpler billing – so you can keep a check on energy use and make sure that you’re getting the best deal. We want to hear your views and experiences of energy bill frustrations. Visit to find out more.

Which? news RSS feeds

For daily consumer news, subscribe to the Which? RSS news feed here. If you have an older web browser you may need to copy and paste this link into your newsreader: . Find out more about RSS in the Which? guide to news feeds.