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Energy firms ‘increasing direct debits disproportionately to price cap rise’

Money Saving Expert founder Martin Lewis warned about ‘worrying issues’ over firms raising direct debits beyond April’s 54% increase.

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Energy bills (PA)

Energy bills (PA)

Energy bills (PA)

Energy companies are increasing customers’ direct debits disproportionately to the price cap increase and the regulator should “crack down” on the wide scale practice, MPs have been told.

Money Saving Expert founder Martin Lewis warned about “worrying issues” over energy companies increasing customers’ direct debits disproportionately to April’s 54% increase to Ofgem’s price cap, even for those in credit.

He told the Business, Energy and Industrial Strategy (BEIS) Committee: “There is no reason to double someone’s direct debit when they’re in credit and the price cap is going up 54%.

“That’s not mathematically sound and it’s a breach of licence conditions. I have been very concerned that a number of companies are doing it to improve their cash flow situation at the expense of their customers and I would like to see the regulator crack down on that quite substantially.”

He added: “It’s important to remember that there is no competition in the market any more. This is not a market … no-one can switch.”

Asked to give examples of firms doing this, Mr Lewis replied: “Anyone with an energy licence. This is a market-wide system.

“Companies are seeing this price change as an opportunity to crystallise a change in payments.

“It’s right across the board with all companies. Consumers have to be wary.

“The amount of playing fast and loose that seems to be going on is huge right now. We need to crack down and we need to be much tougher with firms that do this.”

Mr Lewis earlier told the committee that the Government’s current package of measures to help those on the lowest incomes cope with energy bill increases is “not enough”, adding that it “needs to give them more money. It really is as simple as that.”

The market's gone, I just don't know if it will come back - I hope it will.Martin Lewis

Later, he described how: “This is a market-based system, with absolutely zero market, zero competition.

“There is nothing meaningfully cheaper than the price cap going on out there at the moment.

“The cheapest fix on the market is around 50% more than the new April price cap and it is more than the predicted price cap that it’s going to be in October.”

Mr Lewis later added: “The market’s gone, I just don’t know if it will come back – I hope it will.”

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Money Saving Expert’s Martin Lewis (Kirsty O’Connor/PA)

Money Saving Expert’s Martin Lewis (Kirsty O’Connor/PA)

PA

Money Saving Expert’s Martin Lewis (Kirsty O’Connor/PA)

He said that the way to get people to move in a market-based system “is you have big differentials… and you have a social tariff that protects the vulnerable who can’t engage in the market.

“Well, we don’t have big differentials and we don’t have a social tariff – so we have a broken market.”

Gillian Cooper, head of energy policy at Citizens Advice, also told the committee that the Government’s current energy bill support measures are “insufficient for the scale of the crisis we’re facing”, adding: “We have to recognise that there are millions of households that are simply unable to cope with the energy bill increases that we’re going to see this year.”

She said: “Without further support we’re heading towards a crisis where a significant proportion of the population cannot afford to keep safe and warm in their home.

“That is going to drive up the cost of other public services, because when you live in a cold home you’re more likely to suffer ill health and that will increase the demands on NHS services.

“Children living in cold homes cannot thrive and they’re going to struggle to concentrate in school. So we do need the Government to bring forward more support to help with this crisis.”

She called for benefits to reflect the actual inflation rate, more targeted support for households on the lowest incomes through benefits, grants, increased eligibility for the Warm Home grant, expanding the energy rebate and delaying people having to pay it back, or turn it into a grant.

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