Robert Halfon MP tells us how he’s pushing energy companies to ensure non-Direct Debit customers pay a fair price for paying their bill. With support from 177 MPs across the parties, he’s demanding action.
I was outraged to hear from a constituent that his elderly mother had received a letter from the Co-op Energy Company stating that she was going to be charged £63 extra unless she switched to pay her gas and electric bills by direct debit.
It is understandable that there is an extra administrative cost to not paying bills by direct debit, but £63 is excessive. Shockingly, upon investigation, I found that the majority of energy companies across the UK impose these extra charges, or instead, discount bills substantially for those paying by direct debit. This is particularly the case for the Big Six.
Penalised for paying by cheque or cash
Out of 32 energy companies surveyed, 17 energy companies charged more to customers who were not paying by Direct Debit. And figures from the Department of Energy and Climate Change show that the average annual surcharges were £114 in total – £41 for electricity and £73 for gas.
This is unfair, and hurts the low paid and vulnerable the most.
Some smaller companies charge their customers exactly the same regardless of how their customers pay their bills. These include Ecotricity, Good Energy, Green Energy UK, and LoCO2, and many water companies charge nothing or less than £5 for using other payment methods.
All companies should attempt to follow this example, as it shows that it is even more unreasonable for some of these companies to charge such exorbitant amounts.
Routinely ripped off by energy companies
The poorest and most vulnerable are routinely ripped off by energy companies when it comes to paying for the most essential of items, gas and electric. In the UK, 45% of people do not pay their electricity bills by Direct Debit. Those on lower incomes often prefer to manage their finances by paying for things with cash, and some people do not even have access to bank accounts.
Energy companies should make it clear to customers why they are being charged more for using a particular payment method and the price must be no more than what it costs the company to process the payment. I’m recommending £24 per year (£2 per month) as a reasonable limit to cover costs.
Many companies are including the cost of late payment and sending reminders in their justification for charging more for traditional payment methods. This is not fair on non-direct debit customers who always pay on time. These extra costs created by some customers should be paid for by late fees. In this way, the culprits are directly accountable and innocent people do not have to subsidise them.
There should be a government or regulator inquiry to look at why some companies are able to allow customers to pay by whichever method they prefer without incurring an extra cost. This would ensure that businesses are not hoodwinking vulnerable bill-payers, who might be unaware or unfamiliar with direct debit, into paying more than they have to.
I’d like to hear your views on these discounts, do you think the charges are fair? Have you been stung by these charges before?
Which? Conversation provides guest spots to external contributors. This is from Robert Halfon MP for Harlow, Essex. All opinions expressed here are Robert’s own, not necessarily those of Which?.
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