Ofgem direct debit clampdown finds 99.6% set correctly

A review of the direct debits of almost one million customers sparked by an Ofgem crackdown last year has revealed just 0.4% were wrong or badly communicated.

Last July, Ofgem ordered all suppliers that had increased direct debits by more than 100% to undertake a review, with the results to be audited to ensure they were robust. Out of these almost one million cases, 4,000 direct debits were either set incorrectly or not communicated clearly. The regulator described this as a “small proportion but nonetheless significant if you’re one of the impacted consumers”. To date, more than £117,000 has been paid out in compensation.

Suppliers were highly critical of the regulator’s general approach to its review of direct debits, with Utilita slamming the decision to “name and shame” a number of retailers over their practices.

Ofgem has now confirmed it has closed its reviews of Bulb, Eon, Ecotricity, Green Energy UK, Octopus, Shell, TruEnergy, Utilita and Utility Warehouse. It said it continues to “formally engage” with Good Energy, Outfox the Market and Ovo.

The regulator said the way that suppliers set and manage direct debits has been “one of the biggest areas of supplier improvement” across its series of deep dives into their working practices.

The review identified 56 concerns across the market resulting in 12 formal compliance engagements, one of which progressed to an enforcement order. Yet the vast majority (53) of these have been resolved to the regulator’s satisfaction.

Ofgem pointed to other improvements since the review including an increase in the frequency of direct debit adequacy assessments, as well as new safeguard controls that identify and trigger an additional adequacy review where a direct debit amount is due to increase outside of a set tolerance.

Market Compliance Reviews were announced in April last year to monitor energy supplier performance, with a view to improve standards in areas such as customer service or support for vulnerable customers.

In the regulator’s latest deep-dive it examined customer service and said standards across energy retailers is “just not good enough”, finding failings at all 17 suppliers probed.

Eon was singled out and ordered to make “significant and sustained improvements” around its call handling processes.

It comes as energy retailers are once again in the spotlight over the way they treat their vulnerable customers, following the explosive allegations against British Gas over the way it instals pre-payment meters (PPMs) under warrant.

Ofgem chief Jonathan Brearley has since asked suppliers to halt the forced installation of PPMs, but several major providers have already stopped the practice ahead of this request.