Amid surging complaints about soaring energy charges and credit balances, Ofgem said that although it “did not find evidence” of “unjustifiably high direct debits” it has called for action. It has called for all energy firms that hiked customers’ bills by more than 100 percent between 1 February and 30 April 2022 to review them. This is despite the price cap rising by 54 percent to £1,971 from £1,277. Ofgem estimates that 100,000 Britons were affected by hikes of this level.
The research found that out of a total of 17 large suppliers in the market, the majority were found only to have minor issues.
However, Ofgem highlighted that five had “moderate and severe” weaknesses.
Ofgem said: “Where appropriate, Ofgem also expects suppliers to adjust any miscalculations, including making repayments if needed, and consider whether a goodwill payment is warranted.”
Ofgem has given energy companies two weeks to do this.
If the suppliers don’t take action fast enough, Ofgem will consider enforcement action.
After the April price hike to energy bills, the average bill rose by 62 percent for people paying by direct debit.
The latest predictions by Cornwall Insight suggest that the price cap could rise again to £3,244 from October this year.
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This is up from the previous prediction of £3,003 that was estimated in June.
It is also predicted that the price cap could rise even further to £3,363 from January 2023.
The energy companies highlighted by Ofgem as having severe weaknesses were TruEnergy and UK Energy Incubator Hub (UKEIH) which has now since ceased trading.
In both cases, Ofgem found that the suppliers “did not have a consistent and structured approach to setting customer direct debits” and found “severe concerns over the maturity of their processes”.
Ofgem stated this is “putting consumers at serious risk of inconsistent or poor outcomes”.
The firms with moderate weaknesses were identified as Ecotricity, Good Energy, Green Energy UK and Utilita Energy.
The regulator said it had found failings ranging from “inadequately documented or embedded processes, weak governance and controls, to an overall lack of a structured approach to setting customer direct debits”.
Bulb, E.ON, Octopus Energy, Outfox the Market, Ovo, Shell and Utility Warehouse had minor weaknesses.
British Gas, EDF, ScottishPower and SO Energy were found the have no significant issues.
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Ofgem said that its main “concern” is that “in some cases” it could “lead to customer direct debits being set incorrectly, or not being evaluated for a long time”.
This could then cause “a build-up of unnecessarily large credit balances or debt” depending on whether the customer is under- or overpaying.
Jonathan Brearley, Ofgem CEO, said: “We know how hard it is for energy customers at the moment so it’s crucial that the amount they pay each month in direct debits is right so they can manage their money.
“Suppliers must do all they can, especially during the current gas crisis, to support customers and to recognise the significant worry and concern increased direct debits can cause.”
Founder of MoneySavingsExpert.com Martin Lewis stated that the next increase in the price cap is set to “climax in catastrophe”.
In a post, he wrote: “Enjoy this week’s warmth, the coming winter will be bleak, the cost of living crisis is set to climax in catastrophe unless there is further intervention.”
So far, the Government has not announced any further support from what was announced by former Chancellor Rishi Sunak in May.
For energy costs, the government is to provide every household in England, Scotland and Wales which is connected to the electricity grid will receive a £400 payment to help with energy costs.
This is expected to cover around 28 million homes, however, with the price cap set to increase by a further £1,200 in October, the support does not look like it will be enough for some.