Refunds coming for consumers with high Direct Debits, Ofgem says

Customers who pay too much for their energy via direct debit payments should receive automatic annual refunds, according to Ofgem. 

Ofgem has proposed outstanding balances are cleared once a year, which would prevent suppliers holding thousands of pounds worth of overpayments that are only returned when requested by customers. 

It's also been mentioned that energy suppliers were using this money for "unsustainable business practices."

For customers who pay via Direct Debit, the cost-per-month for energy is usually predicted, and can lead to some customers paying too much, which causes their accounts to go into credit. 

Predicted Direct Debits can build up, and is down to the customer to request the refund, which is a process that can take months. 

Ofgem's proposition

Ofgem has proposed from next year that energy companies automatically clear outstanding Direct Debits back to customers on the anniversary of the start of the their contract. Ofgem estimates a return of at least £65 on average.

To prevent suppliers increasing Direct Debits, Ofgem is proposing a threshold for these payments which will be decided on later in the year. 

Ed Dodman, director of regulatory affairs at the Energy Ombudsman, said:

"Just as people are expected to pay their energy bills on time, we think it's fair to expect energy suppliers to do the same with refunds."

"We know from looking at complaints that suppliers can sometimes take too long to issue refunds, which can be stressful for consumers."

Tom Lyon, director of energy here at Energy Helpline, said: 

“We welcome measures to mandate energy suppliers to automatically return credit to their customers, as currently the onus is often unfairly on consumers to chase companies when they are owed money. Also, by limiting the amount of cash held, Ofgem’s proposals would also reduce the cost to industry and consumers if a supplier ceased to trade.”

Main story: BBC News