- Almost £670 million returned to domestic customers who have closed their accounts since the start of 2014
- Most customers now refunded within 14 days of final bill being issued
- Ofgem updates advice for consumers on energy credit balances
Large suppliers have returned almost £670 million owed to customers who closed their accounts since the start of 2014 when Ofgem called on the industry to take action.
In 2014, Ofgem challenged large suppliers to do more to return money to former customers who had credit on their account after their account was closed, typically after switching supplier.
Large suppliers have since paid back the vast majority - almost 90% - of closed account balances outstanding since then (2014), according to new industry data. Most of the payments to these former customers were made within 14 days of a final bill being issued in line with the commitment suppliers made in 2014.
Ofgem expects suppliers to return the majority of the remaining £97 million – around 10% - of closed account balances built up since 2014.
In some circumstances, it may be more difficult to return longstanding credit balances, for example if the former customer has moved and cannot be traced. If suppliers are unable to find former customers after two years of trying, they will pay any outstanding credit balances into charitable funds. The first such payments have already been made.
Ofgem’s Chief Executive Dermot Nolan said: “Trust can only be restored in the energy market if consumers get good levels of service. So it is good to see the industry has made progress in returning consumers’ money when someone switches energy supplier. We will continue to monitor this area to ensure prompt payment to consumers is standard practice.”
Advice for consumers on account balances
Today Ofgem has published new advice for consumers about account balances, both for current and closed accounts.
For current customers, large suppliers typically review customers’ accounts on a yearly basis and automatically pay back any outstanding balances. Ofgem believes it is right that suppliers are vigilant in doing this. However we advise consumers to regularly check bills, especially to see if they have a balance outstanding at the end of spring.
This is because balances for customers paying by direct debit are largely seasonal. People tend to build up credit balances during the summer when they use less energy.
Credit balances are drawn down during the winter months when people turn up the heating. Current consumers are in credit on average by around £130 each in October before winter bites.
Notes to editors
- In 2014, Ofgem raised concerns that suppliers held around £200 million in closed account credit balances from former domestic customers that they were not paying back. More than three-quarters of that outstanding money held pre-2014 has now been directly returned or gone to helping fuel poor and vulnerable consumers.
As a result of Ofgem’s action, the industry made changes. This included:
- reuniting former customers with unclaimed credit;
- providing continued help for vulnerable customers to claim money back; and
- introducing voluntary minimum standards, including refunding closed account balances as soon as reasonably practicable and within 14 days of a final bill/statement (based on a final actual meter read) being produced for the vast majority of customers.
Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.
Further information for media
For further information, contact:
Ruth Somerville: 0207 901 7460
Media out of hours mobile: 07766 511470 (media calls only)