Ofgem has ordered energy retailers to pause the forced installation of prepayment meters (PPMs).
However, several major suppliers had already taken the decision proactively following the controversy surrounding debt collection agency Arvato Financial Solutions.
EDF and Scottish Power both said warrant activity has been suspended while they review their practices.
Eon has also suspended all work with Arvato in the wake of the allegations while EDF has confirmed it previously worked with the agency but no longer does so.
On Thursday (2 February) explosive allegations were reported by The Times following an undercover investigation which claimed Arvato agents working on behalf of British Gas were flouting industry rules when installing PPMs in the homes of people with disabilities and mental health issues.
The findings of the investigation have been widely condemned, with business secretary Grant Shapps saying he is “horrified” and that the practices were “abhorrent”, while Ofgem has launched an investigation into the matter.
On Thursday Ofgem chief executive Jonathan Brearley wrote to suppliers asking them to review all activities relating to PPM warrants.
He said: “Suppliers need to reassure us that the processes for customers being moved onto PPMs are compliant with all Ofgem rules and, until this is done, we have asked them to pause forced installations.”
He said he had also asked them to look at their relationships with any third-party contractors and examine incentives that “could give rise to poor and unacceptable behaviours”.
He added: “I know many suppliers are struggling financially and there is a wider affordability debate that needs to happen – I have already been clear that some kind of social tariff is needed to tackle the route of the debt problem causing many people to be put onto PPMs. However, there are examples of best practice within the supplier community of really looking after vulnerable customers carefully which proves this issue can be handled fairly and sensitively by suppliers.”
Speaking before Brearley’s announcement, an EDF spokesperson said the supplier only seeks to move a customer to prepayment without their consent “as a very last resort and only when we determine it is safe and practical”.
They added: “In 2022, we applied for 13,766 warrants in relation to domestic customer debt and in around half of these cases we took the decision not to proceed once the customer had engaged and we understood their circumstances.
“Throughout this process, customers can contact EDF at any point to request a change of payment method. We will be delighted to hear from them and our advisors will help.
“We regularly review and update these processes and so we are confident they are fit for purpose. Nonetheless we are currently reviewing them again to reconfirm they are robust and see if we can make any improvements.”
“We have suspended forced installation of prepayment meters while we conduct this latest review,” they added.
Scottish Power is another major retailer to pause warrant activity.
A spokesperson said: “Affordability is a major concern for customers and our processes are tailored to take account of customer vulnerabilities and circumstances.
“We would not switch a customer to prepayment without advanced notice and installing a prepayment meter is always a last resort, only after we have exhausted all other options to speak to and work with customers on debt repayment.
“We deplore the behaviours reported and have suspended all warrant installations while a thorough investigation takes place.”
Eon, which uses Arvato for a “limited range of services” for its field team, says it has decided to pause working with the company.
A spokesperson told Utility Week: “The vast majority of our field work is carried out by Eon employees who follow a rigorous routine and monitoring process for any customer visit. This involves specific training around establishing vulnerability and ability to pay and we audit all our field agents for these areas. Our own agents wear body cameras which helps to protect customers and ensure the correct actions are being taken on home visits.
“We can confirm that Arvato has provided a limited range of services for our field team and we remain confident in our processes and monitoring to protect customers. However, following the recent allegations we have mutually decided to pause all activities with the company until we are able to complete a thorough investigation.”
The spokesperson added that fitting PPMs to recover debt is “always a last resort if a customer doesn’t engage with us over many months”, and that the supplier always conducts home visits before any meter switch to establish whether there are any vulnerability issues.
Elsewhere in the sector Octopus Energy said it has never worked with Arvato, and that none of its third party agencies are incentivised to install PPMs.
The company has only ever installed PPMs to control debt fewer than 200 times and has used a warrant to do so 31 times.
Additionally, an Octopus spokesperson told Utility Week: “We suspended all Bulb warrants shortly after taking over, and Octopus has only installed around 30 meters in prepayment mode via warrant ever – about the same as other companies install every day.
“We’re not installing any at the moment – but companies with a history of abusing customers shouldn’t get away with it just by briefly suspending their activities until the storm is over.”
Ovo Energy is another supplier that has suspended its warrant activity, pausing the process last November.
Rewiring the energy market
In the wake of the findings charities have reiterated their calls for a ban on forced PPMs until stronger rules are in place.
National Energy Action (NEA) says the news “is another chilling insight into why a ban is needed”.
Peter Smith, NEA’s director of policy, said: “There now appears to be widespread evidence of a lack of effective adherence, or enforcement, of current licence conditions. This is leading to vulnerable people being forced onto prepayment meters by bulk magistrate warrants or remote switches.
“It doesn’t just put those households directly affected at risk, it undermines confidence of millions vulnerable people to seek support from suppliers to get them through the worst of the energy crisis. Beyond supporting growing calls for a temporary ban on forced installs, we need to develop a bespoke plan to stop people building up debt and self-disconnecting in the first place.
“This means rewiring the energy market to provide more affordable tariffs and finding new ways to address the underlining debt issues, which are rife due to soaring energy costs.”
Meanwhile Gillian Cooper, head of energy policy at Citizens Advice, said: “It’s truly shocking to see the extent of bad practices amongst some energy suppliers.
“Our frontline advisers know only too well the desperate situations so many struggling customers have found themselves in. Time and time again we have called for a ban on forced prepayment meter installations until new protections for customers are brought in.
“Ofgem and the government need to act now – serious reforms must be made before these suppliers can be trusted again.”