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Can my supplier increase my direct debit?

Our expert says...

Thanks for your email regarding your father’s direct debit payments being increased.

This has been a hot topic in the press, with The Guardian and The Times, among others, reporting on the unfairness of the direct debit billing system. Charging customers for a lot more energy then they’ll eventually use seems to be common practice for most, if not all, suppliers. It applies to any type of gas and electricity tariff whether capped, online or a standard rate deal.

Energy regulator Ofgem is currently looking into the direct debit dispute. It said: “Suppliers should treat their customers fairly, and we expect them to do so. To date we have no quantified evidence indicating misuse of direct debit schemes.”

So what can you do if your payments are increased without notification?

Know your rights

As a consumer there are a few practical steps you can take if your energy supplier has said they will increase your direct debits, or they have already done so, and you are not happy:

1. The average household dual fuel annual bill is £1,308*; if your energy supplier is raising your direct debit payments so that over the year they exceed this figure, you have every right to ask them why. And if you’re already in credit and being told that repayments are to rise substantially, then challenge your supplier.
2. As the customer you have the right to set your direct debit payments at any level you like. You should be aware that if you set them too low though you could end up with a large deficit which you will have to pay off at some point. Be realistic with your repayments.
3. You should always try and give your supplier an actual meter reading, rather than let it estimate. Energy watchdog Consumer Focus predicts that up to a third of all bills could be inaccurate due to estimated meter readings, and suppliers regularly overestimate usage and set direct debit payments accordingly. By taking regular meter readings, your supplier should be able to predict usage more accurately.
4. Under the direct debit guarantee, if the amount to be paid to your energy supplier or the payment dates change, the supplier should notify you 10 working days in advance of your account being debited. If they don’t you have a right to challenge and complain to your supplier. If any money is taken in error the guarantee means the bank has to refund the money wrongly taken.
5. Remember there’s nothing to stop you paying by quarterly direct debit - in which case you’ll simply pay for the fuel you’ve actually used, providing a meter reading is taken. This doesn't allow you to spread the payments though, and you would lose the discounts given by energy suppliers for paying monthly.

If all else fails and your energy supplier still refuses to lower payments or give back your surplus (the money you’re in credit to them), you can simply cancel the direct debit, take the refund , and then reinstate it at an amount you are happy with. Also, it is important to remember that as soon as you cancel the direct debit you will be charged the tariff rates without the discount for direct debit payments, so you may be billed more than you expect.

Hope this helps Robina!

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