Ofgem to review energy firms’ ‘misleading’ letters

Regulator Ofgem will deepen its investigation into the way energy firms’ communicate with customers in debt, following a review earlier this year which found that misleading practises still occur.

The regulator began an initial investigation into the practise of using alternative branding on customer letters to chase those who failed to pay bills, and found that some of the wordings used by suppliers implied that the cases had been passed on to third party collection agencies, when they had not.

Ofgem said it was concerned that customers were being “misled, pressured or scared into making payments they cannot afford”.

While many of the suppliers have changed their practices, the regulator said it will conduct another review of the firms’ communications with customers in debt this autumn to ensure that consumers who are struggling to pay their bills are made aware of repayment options available.

A spokesperson for Ofgem said: “We have recently undertaken a thorough review of energy companies’ use of alternative branding to communicate with indebted customers. We found that while this practice was once widespread, the vast majority are no longer using alternative branding, with some having changed their practice recently. We also uncovered some examples of poor practice which certainly fall below the standard we would expect.”

British Gas, EOn and Scottish Power all ceased their use of alternative branding on debt collection letters in July this year, while EDF and SSE put a stop to the practise in 2010 and 2009 respectively.

Npower still sends final demands from Collections Direct, but Ofgem said no action will be taken against the company as its letters and branding clearly state that Collections Direct is a trading name of Npower.

The regulator has published an open letter outlining its expectations of suppliers when using alternative branding. Ofgem will launch its wider review in autumn this year and report its findings early next year, it said.

The spokesperson added, “The aim of this work is to ensure that consumers who are struggling to pay are made aware of repayment options available.”