Eon pays out £680,000 over direct debit error

Eon has paid out more than £680,000 after an error led to 1.6 million customers having their direct debits taken from their accounts earlier than planned.

A majority of the payments affected were due to be taken in January this year, but the large supplier erroneously took payments on 24 December 2020.

This meant customers may have experienced unexpected overdraft bank charges, difficulty making payments in the run up to Christmas and other unforeseen circumstances.

Eon self-reported the issue to Ofgem on 24 December. A technical fault was blamed for the error, following changes the supplier made to friendly credit hours for pre-payment meter (PPM) customers between Christmas and New Year.

Friendly-hours credit means an amount of credit provided overnight, at weekends and public holidays to a domestic customer when their PPM credit runs low or runs out to ensure continuity of electricity supply or return on supply.

Ofgem said Eon did not realise that a change to the PPM systems would impact instructions to its systems in respect of direct debit payments, meaning payments were taken earlier than scheduled.

After the error was discovered most payments were recredited to affected accounts on 29 and 30 December and then retaken on the appropriate date.

Eon identified a further 110,060 customers who had been impacted by the issue on 31 December and were not included in the original refunds. The company ensured a further direct debit claim was not made on the correct date for those who did not receive a refund.

Following the error Eon made redress and goodwill payments totalling £55,039 to customers who suffered additional bank charges or out of pocket expenses.

In addition, Eon estimated the maximum detriment that the error could have caused customers was £427,312 and will pay an equivalent figure into the voluntary redress fund.

It will further pay £200,000 into the fund in recognition of its failure to address underlying system and governance weaknesses which would have prevented this from occurring.

Following the action taken by the supplier, Ofgem has agreed to close its engagement with Eon.

Eon chief executive Michael Lewis said: “This error should not have happened and it was unfortunate that it was so close to Christmas.

“We apologised to those affected at the time and I apologise to them again now. As soon as we noticed the issue, we took immediate steps to put things right for our customers.”

Anna Rossington, interim director of retail at Ofgem, said: “Ofgem expects suppliers to adhere to the terms of contracts they have with customers, in particular the agreed direct debit payment dates.

“This failure is a reminder to suppliers that when making changes to their systems, they need to undertake appropriate checks to avoid any unintended consequences for customers.

“Ofgem is always prepared to work with suppliers who have failed to comply with their obligations, but who have self-reported and are determined to put things right, as Eon has done.”