Britain’s energy regulator has told a number of suppliers to take urgent action after finding “serious weaknesses” in managing customers ’direct debit.
Ofgem has analyzed how energy companies manage direct debit, finding evidence that customers have been mistreated.
He named a group of suppliers where he had identified “moderate to severe weaknesses”: Ecotricity, Good Energy, Green Energy UK, TruEnergy, Utilita Energy and UK Energy Incubator Hub, which he has stopped marketing.
The regulator said it had found flaws ranging from “inadequately documented or integrated processes, weak governance and controls, to the general lack of a structured approach to establishing customer direct debits.”
Ofgem is concerned that these issues may cause direct debits to be set incorrectly or not reviewed regularly, which can lead to the accumulation of large credit balances or debts, depending on whether the customer is paying less or in excess.
He has threatened to take action, which could include fines or a ban on acquiring new customers, if he does not see a “rapid and significant improvement” on the part of companies.
Business Secretary Kwasi Kwarteng said, “If we don’t see improvements in two weeks, the regulator could issue fines and enforcement orders.”
The findings come as consumers struggle with rising household bills, which are expected to top £ 3,000 a year this winter.
Ofgem CEO Jonathan Brearley said: “We know how difficult it is for energy customers right now, so it’s crucial that the amount they pay each month in direct debit is adequate. so they can manage their money.
“Suppliers must do everything possible, especially during the current gas crisis, to support customers and recognize the concern and concern that may increase the direct debit.”
The energy market turned upside down last year as the combination of an industry price gap and rising wholesale costs pushed nearly 30 suppliers to leave the business.
Ofgem is trying to prevent this situation from happening again by studying the financial resilience of energy suppliers and market machinations.
He also named a group of providers where he had found “minor weaknesses”, including the “lack of documented policies or guidance for staff”. This group consisted of Bulb, which is now in a taxpayer-funded administration, E.ON, Octopus Energy, Outfox the Market, Ovo, Shell and Utility Warehouse.
British Gas, EDF, ScottishPower and SO Energy “had no significant problems” in managing customers’ direct debit, the inspection body found.
The review found that customer debit levels with standard variable rates increased by an average of 62% between February and April, largely due to rising gas costs. Ofgem said it had asked suppliers to review the accounts of all customers whose direct debit had been increased by 100% or more.
Doug Stewart, CEO of Green Energy UK, said: “Ofgem has highlighted areas where we can make improvements and we are already taking steps to address these areas. However, I think given the challenging state of the market, Ofgem must resist- will hit suppliers, like us, who have survived the market crash and [are] doing everything possible to help customers “.
Utilita said she was “surprised and disappointed by Ofgem’s decision to appoint and embarrass suppliers at this time” and disagreed with the regulator’s categorization.
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A Good Energy spokesman said: “Ofgem only raised a concern about our direct debit governance. It refers to internal documentation and we are taking swift action to address it.”
TruEnergy said it “accepts tougher regulation from Ofgem and is working with the regulator to demonstrate full compliance with all areas of its supplier license conditions.”
Ecotricity, whose founder Dale Vince, president of Forest Green Rovers football club, put the business up for sale in April and said he wanted to “pass the baton,” has been contacted for comment.