Don’t let greedy energy2019 giants hoard YOUR cash

Demand a refund from £1.5BILLION stash they have built by sneakily using customers’ credit balances as their bank

NOW is the time to claw back any overpayments made to energy suppliers during the summer – as a new report shows the sneaky tactics some companies employ to keep hold of customers’ cash.

A study of thousands of online reviews left by customers over the past three years shows the extent of sly increases to direct debit payments and unacceptable delays in making refunds by many gas and electricity providers.

The investigation by Switchcraft, a service that automatically moves consumers to cheaper tariffs, shows that nearly a quarter of customers’ complaints related to overcharging or having direct debits increased – despite being in credit.

Some in the 3,500-strong sample saw monthly payments rise by up to 40 per cent, even though suppliers owed them money. In more than 50 cases, households reported direct debit increases without any prior notice – even though customers should be notified at least ten days in advance of any rise.

Alex Dickson, head of research at Switchcraft, says the practice is allowing suppliers to play ‘banker’ with customers’ money.

He says: ‘Households are being treated more like micro-lenders than energy customers. If a supplier has 10,000 customers in credit by just £20, that’s a £200,000 interest-free loan to buy energy, cover business operations or invest in further growth.’

But the sneaky loan grab is not the only reason customers should demand a refund of any credit sitting in their energy account. A dozen providers have gone bust in the past year. Toto Energy, which had 134,000 customers, last week became the latest casualty and further failures are expected this winter.

It is estimated that suppliers are holding on to more than £1.5billion of customers’ cash.

If a supplier fails, credit balances are ring-fenced under rules set by regulator Ofgem. A new supplier is chosen to take responsibility for abandoned customer accounts.

But there have still been problems. Customers of Extra Energy, for example, which went into administration in November last year, waited months for a refund. A final bill is needed before overpayments are returned, but the last wave of final bills only hit doormats or email inboxes last month.

One customer commenting online this month says: ‘Like a lot of other customers I want my credit balance with Extra Energy returned to me. It is my money and I want it back.’

Overpayments have swelled in the past decade as automatic direct debits are now the payment method for 70 per cent of households, compared to 20 per cent in 2007 – when a lot of people would have paid on receipt of a bill.

Paying via direct debit is usually a condition for signing up to cheaper tariffs. It also suits many households – until a provider goes bust. As a result of recent company failures, Ofgem has announced new rules to ensure suppliers do not compromise customer service standards by growing too quickly.

Ofgem will now have the power to request an independent audit of a company’s finances that could result in a supplier being prevented from taking on new customers if they are failing existing ones. Companies will also be required to have ‘exit arrangements’ in place in case they fail. But the implementation of these new rules won’t happen until next year at the earliest.

Dickson adds: ‘As the retail energy market contracts and conditions get tougher for energy companies, we can expect more creative billing and more bankruptcies.

‘Consumers need to ask themselves – is it really in their best interest to have their energy account running into credit? Refunds from failed suppliers can be messy and drawn-out.’

Comparison website TheEnergyShop is aware of suppliers inflating direct debits ‘without notice or justification’ prior to bankruptcy.

A ‘winter uplift’, as it is known, is common among suppliers. Joe Malinowski, founder of TheEnergyShop adds: ‘Excessive winter uplifts of 30 per cent plus are simply another way for suppliers to hoard customers’ cash to finance their businesses. Customers may want to avoid these suppliers.’

Switchcraft’s analysis also shows 47 customers were billed by a new supplier before a single watt of energy was supplied – known as ‘advanced billing’. In some cases, two months’ payment is taken before an account has been transferred from an old supplier.

More than 230 customers waited more than a month to receive a credit refund. In 15 cases customers were waiting six months or more and of these, one was owed more than £700. More than one third of customers found their energy company ‘difficult’ or in some cases ‘impossible’ to contact when payment issues arose.

Finally getting through to customer services did not always make a difference – with many reporting ‘threats’ or ‘pressure’ from staff when settling direct debit disputes.