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Ofgem to Investigate Excessive Direct Debit Surcharges

Written by at 15:50

Business and home energy customers should not be charged for opting not to pay their bills via direct debit, figures from within the industry have agreed.

In news that has come to the delight of the energy comparison team here at Love Energy Savings, MP’s will look to cap the amount consumers are charged for choosing to pay their gas and electricity via card payments and other methods.

Although this is not a trend that is unique to the energy market, many have been growing increasingly frustrated at the amount they are being charged for simply opting to pay their bills the old fashioned way. Indeed, customers should be able to pay their energy bills how they please provided it is in full and on time.

Millions of Energy Customers Paying Charges...

At present, in excess of twelve million people and businesses are paying an average fee of £80 due to the fact that they pay for their energy quarterly or using a pre-payment meter. This has been deemed as “an extortionate amount of money and completely unnecessary” by Robert Halfon, Conservative MP for Harlow. It has been suggested that this figure should be capped at around £24, in order to be fairer for consumers who are paying their gas and electricity bills on time.

These charges cannot be found on the majority of energy bills and many customers are thought to be unaware that they are even paying these surcharges. Energy companies have been able to get away with this with a rather clever marketing technique, calling the lack of charge for customers paying by Direct Debit a ‘discount’. This is not strictly true and has been the crux of a campaign designed to help nearly half of the country who aren’t paying using the method.

Ofgem has stated that there is currently no evidence to suggest that the UK’s energy suppliers are charging their customers too much, but are happy to discuss the issue at a forthcoming summit set to take place in a few weeks.

Which Energy Suppliers Are The Culprits?

Many readers will not be surprised to see which energy suppliers are taking the mickey, following our feature regarding Ofgem's record fine to E-On for mis-selling energy products. This is in contrast to the likes of Green Star Energy and Ecotricity who do not charge domestic or business energy customers a single penny for not having a direct debit set up.  First Utility took heed of criticism during the early stages of the year and reduced their surcharge from £96 to a far more reasonable figure of £24.

Check out our league table of the best and worst performers when it comes to direct debit surcharges.

Gas And Electricity Charges

What Are The Surcharges For?

When quizzed about these seemingly excessive charges, the providers stated that they were to cover the cost of chasing customers who do not pay on time or have to be chased for payment. So, it appears that a letter, call or email can now cost energy suppliers nearly £100 and the charges also punish customers who pay on time on a regular basis. With the larger suppliers recording ever increasing profits, this issue certainly appears to be playing into the hands of the taking from the poor and giving to the rich ethos.

The forthcoming summit will determine whether or not these charges do indeed exceed the amount it costs to chase payments and indeed, whether or not it is fair to penalise customers who pay punctually just because they do not pay by direct debit. A solution which may or may not prove to be viable, is to share these costs with customers who use direct debit, although this is unlikely to sit well with almost fourteen million energy customers who do just that and who also do not deserve to be reprimanded.

Be sure to keep tabs on our Energy Guides and News Centre to ensure you stay in the know about anything and everything energy comparison related.

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