Ofgem tells energy firms to take urgent action to fix direct debit problems

theguardian.com:

The energy regulator for Great Britain has told a string of suppliers to take urgent action after finding “severe weaknesses” in handling customers’ direct debits.

Ofgem has scrutinised how energy companies handle direct debits, finding evidence that customers have been treated poorly.

It named a group of suppliers where it had identified “moderate to severe weaknesses” – Ecotricity, Good Energy, Green Energy UK, TruEnergy, Utilita Energy and UK Energy Incubator Hub, which has ceased to trade.

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”.

Ofgem is concerned that these issues could lead to direct debits being set incorrectly, or not being reviewed regularly, which can cause the buildup of either large credit balances or debt, depending on whether the customer is under- or overpaying.

It has threatened to take action – which could include fines or a ban on acquiring new customers – if it does not see a “swift and significant improvement” by the companies.

The business secretary, Kwasi Kwarteng, said: “If we do not see improvement in two weeks, the regulator could issue fines and enforcement orders.”

The findings come as consumers battle soaring household bills, which are expected to top £3,000 a year this winter.

Ofgem’s chief executive, Jonathan Brearley, 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