OFGEM tells Big Six to hand back £400 million of customers’ own money

ofgemOFGEM has called on Britain’s big energy suppliers to make sure money is returned to customers after it discovered that these companies hold more than £400m in credit from closed accounts.

Analysis by OFGEM, the UK gas and electricity markets regulator, has revealed that the large suppliers hold balances from closed accounts of at least £202m from former domestic customers and £204m from former non-domestic customers and that around 3.5m household accounts and around 300,000 business accounts are affected.

Andrew Wright, Interim Chief Executive Ofgem, commented: “When many people are struggling to make ends meet, it is vital that energy companies do the right thing and do all they can to return this money and restore consumer trust.”

“We want to see decisive action by suppliers, individually and collectively, to address this issue and, wherever possible, to ensure that the balances they currently hold are returned to consumers. Where this can’t be done any remaining sums should be used to benefit consumers more generally, and suppliers need to be very clear with consumers about what they will be doing with this money.”

Ofgem has identified three key issues that must be resolved:

1. Reuniting individual consumers with their money

We want to see suppliers doing all that they can to ensure that money is returned to the people to whom it is owed, with an industry-wide campaign to ensure that refunds are made wherever possible. Our new enforceable Standards of Conduct require that suppliers treat consumers fairly. We will examine whether the practices of individual suppliers have breached our rules.

 

2. Using balances that cannot be returned to individuals to benefit consumers more widely

Where money cannot be returned to individual consumers, we expect companies to find ways to use this money to benefit consumers more generally and be clear in communicating what they will do with this unclaimed money.

 

3. Preventing this issue from happening again

Suppliers’ policies and processes must prevent such large sums being retained by them, with crystal-clear communication to consumers about what to do when closing an account. They should be open with customers about the size of the balances held and what they are doing with them.”

 

A spokeswoman for Energy UK – which represents the Big Six and other utility companies – said: “Energy companies try and make sure individual customers’ money gets back to its rightful owners. However, more commonly energy companies are owed many times more money by people who leave unpaid debts behind them.

“Although companies are working to return money where there are credit balances sometimes former domestic customers provide no new contact details so suppliers don’t know how, or to whom, they can return the money. The most common reasons energy companies end up holding funds are when the bill payer has moved home or when a customer dies and suppliers have no record of the next of kin.  

“Suppliers already agreed with government last year that they would take all reasonable steps to trace customers who leave a credit balance behind.”

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