Ofgem undertook a review of the direct debit arrangements of the six major energy suppliers after customers complained about significant increases in amounts they were being asked to pay. We were concerned that suppliers were doing a poor job in explaining the basis for payments.
The results of this review, published in March 2009, highlighted a number of issues and areas of best practice. Since then energy suppliers have said they will make some improvements in the areas identified by the investigation. But we want to ensure we can take action to protect consumers if there are significant problems in future.
Following consultation Ofgem has introduced new obligations on suppliers to ensure direct debit payments are accurately set and clearly explained. The new condition in suppliers’ licences will mean they must ensure payment levels are clearly and accurately explained and based on the best available information. Suppliers will also need to be able to justify why they are holding onto credit surpluses built up by a customer.
The new licence conditions came into effect on 18 January 2010.