Bank payment trap means pensioners pay more for energy
PENSIONERS are at risk of overpaying on their energy bills when they switch suppliers because power companies are failing to explain they must tell their banks to stop sending money.
People over the age of 65 are being urged to check their bank statements after the energy ombudsman estimated hundreds of thousands had suffered incorrect charges, poor service or other problems.
Families are being asked to help elderly parents and relatives find cheaper deals because nine in 10 failed to switch accounts last year, missing out on hundreds of pounds in savings.
Now it has emerged that pensioners are being hit by a little-known payment trap when they move to a new provider. The problem occurs shortly after households are sent a final tally of how much energy they have used. If the total is more than the amount the firm had estimated, there is a bill to settle.
British Gas, Eon, EDF, Scottish Power and SSE allow customers to clear the remaining balance by setting up a standing order, which typically spreads the payments over 12 months.
Many people prefer this option, as opposed to a direct debit, because they retain control of how much money leaves their bank account, and when. But, crucially, customers are being left unaware that they must cancel the automatic monthly payment themselves once the debt has been cleared.
One 82-year-old, who owed £473 when he switched accounts, ended up overpaying by £240 because money kept coming out of his account after the 12-month payment period ended.
Peter Cooper, from Worcestershire, was a customer of Age UK, which works with Eon to sell energy to the over-60s. “How many more people are paying without realising they have paid off their debts?” asked Mr Cooper in The Sunday Times.
“I had no problem in paying what was due but I thought a company focusing on older people would be more helpful rather than trying to catch them out.” He recovered the overpayment only by submitting a complaint.
A spokesman for Age UK said it would see whether there was “more we can do to help people to avoid accidentally overpaying”. Eon said: “We would encourage any customer who has concerns with their bills to contact us.”
Most energy providers recommend using a direct debit to clear debts, as the payments stop automatically.
Energy regulator Ofgem found 88 per cent of customers did not switch suppliers last year, despite widespread advice that doing so can save hundreds of pounds.
Philip Sellwood, the chief executive of the Energy Saving Trust, said: “We’re urging sons, daughters, friends, neighbours and even older people themselves to help each other, or someone they know, to check and make sure they are on the best deal online or over the phone.”
Of people over 65, eight per cent said they did not speak out about issues with their supplier either because they hated to make a fuss or they were worried they would feel intimidated by the company if they complained.
Lewis Shand Smith, the chief ombudsman, said: “Compared to the general population, those in later life are likely to rely more heavily on their energy provision so it’s worrying that so few take a complaint further when they have one.”