Energy firms warned over ‘direct debit hikes’

Energy companies may be directing customers to tariffs that “may not be in their best interest”, the energy regulator has said

Big Zero Report 2022

Ofgem has raised concerns about increases in direct debit payments by energy companies.

It said some suppliers may have been increasing direct debit payments by “more than is necessary”, or directing customers to energy deals that “may not be in their best interest”.

The new price cap brought an increase of £693 on energy bills.

Jonathan Brearley, the boss of the energy regulator said: “In examining the gas crisis, we have identified one of the root causes of the failures of many of those suppliers who exited the market is related to the way that they have managed the money paid to them by customers.

“This is money that is intended to pay for energy, or collected to support the wider development of renewable energy.

“However, some suppliers have been using these balances to prop up their finances, enabling them to follow more risky business models with reduced financial resilience and higher likelihood of failure.

“If that supplier becomes insolvent, the cost of replacing those balances has to be picked up by other suppliers and ultimately all energy consumers.”

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