Fines warning for energy ‘profiteers’
Watchdog set to punish firms over ‘needless’ debit increases
ENERGY firms could face massive fines in a crackdown on the practice of hiking customers’ direct debits by more than is necessary.
Millions of households saw bills rise by 54 per cent last month to an average £1,971 as energy regulator Ofgem’s price cap rise came into force – to reflect the soaring cost of wholesale gas and electricity.
But many consumers have complained that their suppliers have increased their monthly direct debit demands by even more than this – doubling them in some cases.
Ofgem’s chief executive Jonathan
‘Must translate into fairer treatment’
Brearley last month said there were ‘troubling signs’ of direct debits being hiked ‘by more than is necessary’.
Consumer experts have raised concerns that some suppliers may be doing this to line their coffers.
And the regulator has now launched a review, giving firms three weeks to explain their hikes.
Business Secretary Kwasi Kwarteng said suppliers found to be in breach of Ofgem’s rules could face ‘substantial fines’. He wrote on Twitter yesterday: ‘Some energy suppliers have been increasing direct debits beyond what is required. I can confirm Ofgem has today issued compliance reviews.’
He added: ‘The regulator will not hesitate to swiftly enforce compliance, including issuing substantial fines.’
UK households currently owe energy suppliers around £1billion, twice as much as they did a year ago, according to Uswitch. But the comparison site also found 11million households had £1.4billion in credit on their accounts.
Adam French, consumer rights expert at Which?, last night welcomed Ofgem’s intervention, saying: ‘This action must translate quickly into fairer treatment for consumers – with many struggling to make ends meet during a relentless cost of living crisis, people cannot afford to be charged over the odds for essential services.’
It came as Boris Johnson yesterday ruled out a one-off windfall tax on UK energy giants despite BP posting bumper profits. It made £5billion in underlying profit in the first three months of the year – its best quarterly result since 2008 – as oil and gas prices soared.
But the PM said: ‘If you put a windfall tax on the energy companies, what that means is that you discourage them from making the investments that we want to see that will, in the end, keep energy prices lower for everybody.’