Energy companies are adopting increasingly aggressive debt collection practices and sharpening their communications with customers to boost profits, a leading energy poverty charity has warned.
National Energy Action (NEA) said households are being forced into far worse situations than in previous years, including higher direct debits with no change in use, unaffordable debt repayment plans and prepaid meters, as energy companies are accelerating debt collection to recoup costs.
The charity reported that customers were being ‘aggressively hunted down’ for payments and said letters and other communications from businesses have become considerably sharper and arrive faster than normal.
With bills set to rise by 54% in April, which should push even more people into debt, NEA warned that if energy companies did not change their practices, it would lead to increased energy rationing and self-disconnections.
Customers told the Observer to be prosecuted by the collection services within the invoice payment period of 14 days.
“What’s driving this is that over the past few months suppliers haven’t been able to make a profit, so chasing debt becomes much more important to them. as a business and that’s what’s driving this change in tactics to reduce the debt levels that they’re seeing,” said NEA policy and public affairs manager Matt Copeland.
Energy companies are required by regulator Ofgem to draw up debt repayment plans based on what customers are able to pay. But Copeland said when customers get into debt, companies are “less proactive” in ensuring repayment plans are affordable for customers.
Meanwhile, he said some customers are being subjected to the “double whammy” of unaffordable debt payment plans and rising direct debits all at once. “Overall, the process around debt and escalation is intensifying and we’re seeing people getting into this process much faster.”
The NEA sees particularly acute problems with customers whose debts were transferred to administrators rather than to their new supplier when their energy companies went into receivership.
“In these cases, we are seeing much more aggressive debt collection practices that circumvent many necessary protections, especially for the most vulnerable customers,” Copeland said.
He called on Ofgem and the government to take action to close the loopholes that make this possible, particularly ahead of April’s cost hike.
Annamaria Bridson from South Wales was so surprised to receive an email from Ovo Energy’s debt collection department, just five days after receiving an invoice earlier this month, that she thought it it might have been a scam. Not only did the bill for her late mother’s property say she had 14 days to pay, but she had already paid it.
“It’s absolutely appalling,” she said. “Receive an email from a collection service five days after receiving an invoice? This will freak anyone out.
A 49-year-old woman from London, who is on disability benefit and does not wish to be named, said she had been in debt to EDF Energy for some time. Recently, she had seen an escalation in the letters from the company, which was detrimental to her sanity.
“I pay £50 off and then you add £50 two days later. How will I ever get out of debt?
The Money Advice Trust, which runs National Debtline, reported issues with customers being told they had to pay more than they could afford in monthly arrears and direct debit payments and vulnerable circumstances not being taken into account. consideration. They called on Ofgem and suppliers “to work together to agree a new energy plan to help people in energy debt”.
Ofgem said debt management “must be done in a fair and reasonable manner at all times, including communicating and taking into account customers’ ability to pay”.
A spokesperson said: “Suppliers cannot extend unlimited credit to customers, but we will not tolerate rough practices or aggressive debt collection. »
A spokesperson for Ovo said: ‘We are truly sorry for Ms Bridson for the shortcomings in service she has experienced. We can confirm that the account is now updated.
An EDF spokesperson said it would look into the customer’s case and added: “In relation to customers with debt problems, at EDF we are committed to doing everything possible to ensure that customers be well accompanied.”
The spokesman also said EDF made a loss in 2021.