Energy firms told to pay back £400m owed to customers

Published on Friday, 28 February 2014 09:45
Written by Daniel Mason

Energy companies have been told they should launch an industry-wide campaign to return money owed to customers who have switched suppliers or moved house.

The regulator, Ofgem, said firms held more than £400m in outstanding balances that ought to be repaid to households and business that closed their accounts.

It claimed that 3.5 million domestic accounts and 300,000 commercial accounts were affected.

Ofgem's interim chief executive, Andrew Wright, said it was "vital" for the big six companies – British Gas, EDF Energy, Npower, SSE, Eon and Scottish Power – to "do the right thing" and hand the money back.

"We want to see decisive action by suppliers, individually and collectively, to address this issues and, wherever possible, to ensure that the balances they currently hold are returned to consumers," he said.

In cases where former account holders could not be traced, the money should be used to "benefit customers more generally", he added.

Ofgem said energy companies should be "crystal clear" in their communications with customers about how to close an account properly and "be open" about the outstanding balances they held, to prevent the problem developing again.

The body that represents the industry, Energy UK, insisted that customers owed suppliers "many times more" in unpaid debts than they owed to customers.

And it said that in many cases energy firms could not return money because customers failed to provide new contact details.

"The most common reasons energy companies end up holding funds are when the bill payers has moved home or when a customer dies and the suppliers have no record of the next of kin," Energy UK said in a statement.

It added: "Firms can't even begin to return lost money if they don't have up to date contact details and an accurate final meter reading."

Labour’s shadow energy and climate change secretary, Caroline Flint, said: “There is no excuse for these companies to hoard their customers’ cash – if people are paying by direct debit their supplier will have their bank details and should be able to refund any balance when the account closes.

"Ofgem are right to challenge the energy companies over the huge balances they’ve accumulated from closed accounts, although people might wonder why this problem was allowed to go unchecked for so long in the first place.”

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