10 May 2022

‘Robust action’ to follow if energy direct debit increases are unfair – Ofgem

10 May 2022

“Robust enforcement action” will be taken if energy companies are found to have treated consumers unfairly when increasing direct debit payments, officials from the regulator Ofgem have said.

A “very invasive” review is under way into the way energy companies use direct debits, they said.

It follows concerns raised by Martin Lewis’ Money Saving Expert website, which said at least 30% of customers with British Gas, Octopus Energy and Shell Energy had their direct debits increased by 100%.

Mr Lewis said the scale of the direct debit increases “smells wrong” – even when accounting for the recent increase of the energy price cap.

Martin Lewis said the increase ‘smells wrong’ (Jeff Overs/BBC) (PA Media)

Neil Lawrence, Ofgem’s director of retail, spoke to the Scottish Parliament’s Net Zero Committee on Tuesday.

Scottish Labour MSP Monica Lennon asked him about the issue, saying some consumers had seen their bills double despite energy prices going up by 54%.

Mr Lawrence said he recognised times were currently “troubling” for consumers.

Market compliance reviews are currently under way across the industry, he said, which will look into direct debits and whether increases are fair.

He said: “That is a very, very invasive review, we’re collecting a range of data but we’re also looking at the management control frameworks that are in place at suppliers to assess that they really do take this seriously.

“Martin (Lewis) has conducted some independent analysis and we absolutely welcome that.”

We will take this very seriously

He continued: “Rest assured, where I find and where my colleagues find that suppliers have not treated customers fairly we will take robust enforcement action over that.

“Because customers need to receive a fair price for their energy charged for their supplier. So we will take this very seriously.

“We are on it and I’m looking forward to getting the results back from our compliance work.”

Mr Lawrence also told the committee he could not speculate on how high energy prices would rise in October this year.

He said Ofgem was taking steps to ensure the energy market was more resilient, following the recent collapse of a number of suppliers.

The changes are being brought in “at pace” and are expected to be completed by the end of the year, he said.

Discussing fuel poverty, he said 613,000 households in Scotland were considered to be in this category and 311,000 in extreme fuel poverty.

Mr Lawrence said: “We absolutely recognise the size and the scale of the challenge that those individuals are facing.”

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