Energy providers bow to pressure on direct debits

By TOM MCGHIE, MAIL ON SUNDAY SENIOR FINANCIAL CORRESPONDENT
Updated:

Minister Mike O'Brien has ordered energy companies to pay back billions taken from consumers

Minister Mike O'Brien has ordered energy companies to pay back billions taken from consumers

Energy companies have agreed to change their code of practice after a campaign by Financial Mail to stop the abuse of direct debit payments.

Energy Minister Mike O'Brien ordered industry regulator Ofgem to launch an investigation into allegations that energy providers were taking billions of pounds in direct debit payments unnecessarily.

More than 1,000 Financial Mail readers have complained that the six big energy companies forced them to build up big credit balances by setting their direct debit payments too high.

Financial Mail last month highlighted the case of an 80-year-old widow who was forced by British Gas to pay an extra £54 a month for her gas, even though it owed her £457.

After its initial investigation, Ofgem called in Dr Garry Felgate, head of trade body the Energy Retail Association, to explain this behaviour.

Ofgem said: 'We had a constructive meeting with the ERA and it has committed to address the concerns we have raised by amending its billing code.

'We have told the ERA to come back to us by the end of this month with their proposals. We are giving the industry the chance to resolve this issue.

'If we are not satisfied with the outcome we will consider other options.'

It is understood that the energy companies could be fined millions of pounds if they are found to have abused their positions.

Most watched Money videos