Excessive use of Prepayment Meters Unwarranted
Ofgem, the independent regulator of gas and electricity suppliers, has warned energy companies that their excessive use of prepayments meters to recover debt is unwarranted and warned them they are not doing enough to help vulnerable customers.
84,000 customers forced onto prepayment meters
The regulator’s warning has come as they published their latest annual report into how vulnerable customers are being treated by their energy providers and revealed last year the number of customers being forced onto prepayment meters, using court obtained warrants, rose from 81,000 to 84,000.
However, they also revealed significant improvements have been made across the UK in terms of disconnections, with only 14 customers being disconnected for arrears, with 13 being disconnected in England, 1 in Wales and none in Scotland.
Their report, however, also revealed the increase in the number of warrants being obtained was led by Utility Warehouse, whose number of warrants were almost 5 times the industry average; followed by British Gas, whose number of warrants was double the industry average.
Vulnerable Customers Treated Less Fairly by Smaller Firms
The regulator also found that vulnerable customers who were financially struggling were more likely to be treated less favourably when they were with a small or medium sized firm, than when they were with a larger supplier. For example, they found that customers with small and medium sized firms paid on average 3 times more towards their arrears than those with larger companies, suggesting the affordability of plans was not being fully explored by these firms.
They also found small and medium sized companies only on average had 24% of their customers who had arrears in repayment plans, whilst larger firm had 60% of customers in plans.
The energy regulator also found that in total, there were nearly 600,000 customers in arrears with their electricity bills and 460,000 in arrears with their gas bills.
Priority Service Registers
Ofgem also found the number of vulnerable customers on firm’s Priority Service Registers (PSR) had increased, but again smaller and medium sized firms were not doing as well as the larger firms when it came to identifying vulnerable customers. Personal Service Registers allow vulnerable customers to access additional services for free, such as password security schemes, for when they are being contacted or visited by their energy supplier, quarterly meter readings and the right to have bills sent to third parties, such as relatives. Ofgem also found the number of customers on Priority Service Registers was lower in Scotland than elsewhere in the UK.
Debt Assignment Protocol
Ofgem also reported that the number of customers who had been able to swap providers, whilst in arrears, had increased, but the number who had done so through the Debt Assignment Protocol scheme was still extremely low, with only 6% of gas and 5% of electricity applications being successful. The Debt Assignment Protocol allows customers who have arrears of between £100 and £500 to switch providers, with the arrears being re-assigned to the new provider.
Speaking about the new report, Creditfix spokesperson, Pearse Flynn, said:
“After the severe weather we saw earlier this year, it is clear utility providers are still not doing enough to help vulnerable customers. Heating your home and preparing hot food is essential for vulnerable people and is vital for them and their family to remain healthy and live comfortably.
“Although we need to acknowledge that significant progress has been made in reducing the number of people who are being forcibly disconnected, if fuel providers continue to excessively use prepayment meters, then there is a danger the number of customers disconnecting themselves will be hidden.”
Are you struggling with you Fuel Providers Bills?
If you are struggling with your fuel provider’s bills, there are a number of things you can do. First, you should contact your provider to let them know you are experiencing financial difficulties and ask them if there is a less expensive tariff that you can be placed on. You can also ask that they add you to their Priority Service Register.
You should also not agree to be placed onto a prepayment meter unless you wish to, and instead ask the company to work with you to develop an affordable repayment plan.
You can also ask them if they have a hardship fund that you can apply to. Many suppliers operate hardship funds, which are specifically designed to help customers struggling with their bills. Sometimes these can be used to clear a debt completely.
One of these trust funds is the British Gas Energy Trust, which is open to all customers, not just British or Scottish Gas customers. Other firms operate their own schemes for their own customers (see E.ON Energy Fund, npower Energy Fund, OVO Energy Fund, Scottish Power Hardship Fund and SSE Priority Assistance Fund ).
However, if your fuel debts are only part of the problem and you are struggling with other debts, then taking a holistic approach is better. This can be done by speaking with an experience money adviser and getting them to explore all options with you, including the Debt Arrangement Scheme in Scotland and other formal solutions such as Protected Trust Deeds and Individual Voluntary Arrangements in England, Wales and Northern Ireland.
If you wish to speak with an experienced and friendly money adviser, then contact Creditfix free on 0808 2085 198