Advice from Martin Lewis as direct debit warning sent to customers of three energy companies
The cost of living crisis and rising energy prices are daily news stories. People’s Champion Martin Lewis was clear about his thoughts and concerns on the matter.
Today, the MoneySavingExpert (MSE) team issued an advisory that customers of three major energy companies have warned their prices have skyrocketed. People who work with British Gas, Octopus Energy and Shell Energy said their direct debits had doubled since the price hike. And this despite the price cap which is half, according to Money Saving Expert (MSE).
Founded by Martin Lewis, the website said that at least 30% of business customers who were in credit and on a capped rate reported an increase in their levies. Across all businesses, 25% of customers in this situation said their withdrawals had doubled or more.
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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 gathered from a survey conducted by MSE between April 26, 2022 and May 3, 2022, with 41,000 responses, Liverpool Echo reported.
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.
MSE 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. Martin said: “The fixed monthly charge is how up to 80% 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’ve heard people shocked to learn that their direct debits had doubled or tripled.
“Scary, for some people it’s reasonable. Those who drop cheap solutions, switch to expensive ones, or have 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 overpayments eventually have 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.Yet under the companies licensing conditions 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 increased way too much: submit an up-to-date meter reading first, then talk to your provider and politely ask him to justify the raise, if not ask for him 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 invoice accurately and treat customers fairly. We recently wrote to suppliers warning them that we are commissioning a series of compliance reviews of the market to ensure, among other things, that they process direct debits fairly and that, overall, they are held to higher standards of performance in terms of customer service and protection of vulnerable customers.
“Once Money Saving Expert provides us with this data, we will review it as part of this crucial review.”