Home Somerset business Direct debits doubled after energy boost, some Britons say

Direct debits doubled after energy boost, some Britons say

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Britons who are with British Gas, Octopus Energy and Shell Energy said their direct debits had doubled since the price hike, despite the price cap being half that, according to Money Saving Expert (MSE).

The website, founded by Martin Lewis, said that at least 30% of the companies’ customers, who were on credit and on a capped rate, reported an increase in their direct debits.

Across all businesses, 25% of customers in this situation said their withdrawals had doubled or more.

Energy prices have skyrocketed over the past year and last month the energy price cap was increased by 54% for the average household.

The results were collected from a survey conducted by MSE between April 26, 2022 and May 3, 2022, with 41,000 responses.

He added that the survey was self-selected, so some people may have responded more frequently.

However, he said that while the proportions are “skewed”, the results show a significant number of people reporting that their direct debits have doubled.

The survey also found that those coming out of fixed agreements saw their direct debits increase the most.

MSE said this was to be expected as they were likely on the cheapest fares and are now moving to price caps.

It will report its findings to the energy market regulator Ofgem, the Department for Business, Energy and Industrial Strategy (BEIS) and the House of Commons Business Committee.

Mr Lewis said: ‘The fixed monthly charge is how up to 80 per cent of people in England, Scotland and Wales pay their energy bills.

“The theory is good: your annual cost is divided by 12, so you pay the same amount each month, smoothing out high-use winter costs and low-use summer costs.

“Yet for months I have heard people shocked to learn that their direct debits had doubled or tripled.

“Scary, for some people it’s reasonable.

“Those exiting cheap, moving to expensive, or in energy debt would expect to see their direct debit increase by more than the already hideous 54% increase in the energy price cap.

“So to test what’s really happening, we analyzed responses only from people with credit who were and remain on a price cap, because they should only see increases in line with the price cap, around 45% to 65 % .

“Yet even then, on average, many report higher increases, and a quarter say they have been told to pay double what they were paying before.

“It smells bad to me.

“While a higher direct debit doesn’t mean you pay more in the end, any overpayment eventually has to be repaid, it does mean way too much money coming from accounts now, which is often a nightmare in the middle of the cost of living crisis.

Martin Lewis said the findings would be forwarded to BEIS, the House of Commons Affairs Committee and Ofgem (Kirsty O’Connor/PA)

“Yet under the companies license terms you are entitled to a fair levy.

“So if you’re in credit, you’ve been on a standard (capped) variable rate for six months or more, and your charge has gone up way too much: submit an up-to-date meter reading first, then talk to your supplier and politely ask him to justify the increase.

“If that’s not possible, ask for it to be lowered.

“If he refuses, file a formal complaint and take it to the energy ombudsman.”

In response, Octopus Energy told MSE that its own analysis of customer accounts data showed that only 0.84% ​​of people on credit who had been on its standard tariff for more than three months saw their monthly payments double, with a median increase of 59%.

Meanwhile, British Gas told the website the above-average increase may be due to it offering customers the option to freeze their direct debits at their existing levels last winter.

A spokesperson for Ofgem said: ‘Protecting energy customers is our top priority – and it has never been more important than now, during Mental Health Awareness Week, because we are all struggling with the cost of living.

“At Ofgem, we regularly engage with all national suppliers to ensure they charge accurately and treat customers fairly.

“We recently wrote to suppliers advising them that we are commissioning a series of market compliance reviews to ensure, among other things, that they are treating direct debits fairly and that, overall, they are required to higher standards of customer service performance and protect vulnerable customers.

“Once Money Saving Expert provides us with this data, we will review it as part of this crucial review.”