Energy retailers have been given three weeks to provide Ofgem with information relating to their direct debit activities, the business secretary has confirmed.
It comes after the regulator’s chief executive Jonathan Brearley expressed concerns that some suppliers may have been increasing direct debit payments by more than is necessary or directing customers to tariffs that may not be in their best interest.
As a result, Ofgem is undertaking a number of reviews over the coming months to ensure suppliers are fulfilling their licence conditions across key areas of service.
In the first review suppliers have been asked for information about their domestic customer direct debit charging practices, including how they set payments for customers.
In a statement posted on Twitter yesterday (3 May) Kwasi Kwarteng said: “Some energy suppliers have been increasing direct debits beyond what is required. I can confirm Ofgem has today issued compliance reviews.
“Suppliers have three weeks to respond. The regulator will not hesitate to swiftly enforce compliance, including issuing substantial fines.”
In a statement Ofgem said: “Our top priority is to protect consumers and we recently wrote to suppliers to alert them that we are commissioning a series of market compliance reviews to ensure, amongst other things, that they are handling direct debits fairly, and that overall, they are held to higher standards for performance on customer service and protecting vulnerable customers.”
Meanwhile, an Energy UK spokesperson said: “Suppliers are having to increase direct debit payments to reflect bill increases and are required to set them at a fair and reasonable level based on the customer’s individual circumstances – taking into account factors like previous energy use or record with previous payments.
“It’s right that the regulator is looking to ensure that suppliers are complying with those requirements. Customers who do have concerns with the level of their direct debit payments should contact their supplier.”