Ofgem is “completely under-resourced” to deal with the current turmoil in the energy market, Martin Lewis has said.
Giving evidence on Tuesday (22 March) to the Business, Energy and Industrial Strategy Committee, which is conducting an inquiry into energy price rises, the Money Savings Expert chair also said the regulator needs to be “much tougher” with energy firms that hike direct debits.
Lewis criticised suppliers for imposing “disproportionate” increases in direct debits, which he said were taking place “across the board” as companies see an opportunity to “crystallise” increases in payment levels.
“Companies are doing it to improve cash flow situations at the expense of their customers and we would like to see the regulator crack down on that quite substantially.
“The amount of playing fast and loose is huge at the moment.”
However Lewis rejected a suggestion by committee member Richard Holden MP that Ofgem is going “soft” on suppliers but that instead it is struggling to deal with the problems thrown up by the spate of recent supplier failures.
He said: “Just dealing with the number of failed suppliers is a massive resource strain.
“Ofgem is completely under resourced to deal with the problems going on in the market-place at the moment.”
Lewis added that the number of company failures demonstrated that the market had provided a “far greater test” to suppliers than Ofgem had done.
Lewis’ concerns were backed up by Gillian Cooper, head of energy policy at Citizens Advice, who told MPs that Ofgem’s enforcement and compliance team had been insufficiently resourced.
She said: “Ofgem overall has a decent set of rules but rules only work if they are properly monitored and enforced.
“Ofgem at times didn’t get the balance right between encouraging competition and protecting consumers from harm.”
Lewis also backed setting the energy price cap on a four monthly rather than quarterly basis, as Ofgem has recently proposed.
And he said many vulnerable customers are “panicking” at the prospect of the steep rises in the energy price cap, which are due to take place in April and October, including people who rely on electricity to run medical devices at home.
Cooper additionally expressed concern that rising customer debt levels will result in “more aggressive” debt collection practices by energy suppliers.