Ofgem launched a compliance review in May after business secretary Kwasi Kwarteng alleged that “some” companies were increasing direct debit payments “beyond what is required” following the energy price shock linked to the war in Ukraine. The issue came to the fore in March, ahead of a price cap increase of almost £700, when consumer Martin Lewis told MPs that some companies had doubled direct charges in some cases in a bid to improve their cash flow. Ofgem said on Wednesday that Ecotricity, Good Energy, Green Energy UK, Utilita Energy and TruEnergy had moderate to serious weaknesses or failures in their handling of direct debit customers. Another company, UK Energy Incubator Hub, was also placed in this category but the watchdog said it was no longer trading. Ofgem said active suppliers now had to take “immediate and urgent action”, including repayments if necessary, and consider whether the goodwill payments were justified. The problems ranged, he said, from poorly documented or integrated processes, weak governance and controls, to a general lack of a structured approach to setting direct customer charges. He stated that these issues could lead to incorrect determination of direct charges or no assessment for a long period of time. The review found that, on average, direct charge levels for standard variable tariff (SVT) customers between February and April rose by 62% – mainly reflecting the increased cost of wholesale gas. The study showed that 8% (500,000 households) saw an increase of more than 100% that “related” to the regulator. Out of a total of 17 major vendors in the market, the majority were found to have only minor failures. The regulator said there were no significant concerns about direct debit operations at British Gas, EDF, ScottishPower and SO Energy. Those found to have minor weaknesses included Bulb, E.ON, Octopus Energy, Outfox the Market, Ovo, Shell and Utility Warehouse.
