Shadow energy secretary Caroline Flint said Ofgem was “right to challenge the energy companies” for holding onto the money from closed accounts, although “this problem was allowed to go unchecked for so long in the first place”.
She added: “The regulator must now ensure that this money is promptly returned to customers.”
Flint also said “this is the latest example of an energy market that is not working” and that “there is no excuse for these companies to hoard their customers’ cash”.
Climate change minister Greg Barker said the £400 million of consumers’ money held by suppliers was “astonishing” and added he wanted “to ensure that, where possible, customers are rightly returned the money that is theirs”.
The big six suppliers defended their actions in tracing customers and said they do everything they can to find and then reimburse customers with closed account balances.
Ian Peters, managing director of residential energy at British Gas said they “go well beyond our legal obligations to actively seek out customers”, including the use of “specialist agencies” to track down former customers.
Eon said that “process faults” had delayed the reimbursement of credit to former customers, although this money would be returned with 8 per cent interest added.
Where the suppliers have bank details for former direct debit customers, they said the credit from a closed account is automatically refunded.
The major suppliers also highlighted that bad debt, which is the debt the suppliers are left with after consumers close their accounts without settling the account, is four to six times more than the closed credit balance the suppliers hold, and SSE added “this is not a situation that benefits us”.