Direct debit hikes 'turning energy customers away'

21/08/2009

The energy watchdog's plan to provide extra protections for direct debits have been welcomed by uSwitch.com.

According to the price comparison website, customer concerns have led to a 7.3 per cent decline in the number of people who want to make these automatic payments.

The report also calculated that £33.5 million of savings could be missed out on due to this trend - as direct debit gas and electricity deals are consistently cheaper than the alternatives.

At the root of the downturn in demand is the way in which energy firms have adjusted direct debits in the wake of last year's price hikes.

The payments have been increased by an average £22 a month but one in ten customers faced a £50 per month hike, uSwitch.com said.

Ann Robinson, director of consumer policy at the site, said: "This is a deeply worrying trend that is leaving consumers facing a Catch-22. They are moving away from direct debits because of concerns over affordability, but will then end up paying more for their energy because they lose valuable direct debit discounts.

"Ofgem has recognised how vital it is for consumers to have confidence in direct debit arrangements - now it has to act quickly to stop the rot and give consumers the reassurance they need."

Data from the regulator shows that around 40 per cent of Britain's energy customers pay their bills via direct debit.

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