Energy firms hoarding £400m of customers’ cash

Share this article
1
Have your say

Ofgem has called on energy suppliers to return money to former customers after finding that the companies hold more than £400 million in credit from closed accounts.

The regulator found large companies hold at least £202m from around 3.5 million former domestic customers and £204m from 300,000 business accounts, saying it “expects suppliers to do more” to return the money.

It follows recent commitments by most major suppliers to automatically refund surpluses to current direct debit customers.

Ofgem said it had been inquiring into the balances held by energy suppliers, and into the companies’ policies and practices, concerning customers who had closed accounts.

It found “an unacceptably large amount of money being retained rather than returned to consumers” and a wide variation in company practices.

The regulator said consumers needed to be confident that they would not lose out if they closed an account with their present supplier.

It expected suppliers to do all they could to return money to individual consumers, and to tell consumers clearly what to do when closing an account.

Where it was not possible to repay a balance, it said suppliers should find ways to use the money to benefit consumers more widely and be clear in communicating their plans.

A spokesman for Perth-based SSE said: “We’re happy to work with anyone who has legitimate suggestions for how we can find customers more easily and efficiently.

“However, the reality is that the bad debt we have had to write off in recent years is about four times the amount of credit that couldn’t be returned, so this is not a situation that benefits us.”

A spokesman for trade body Energy UK said suppliers try to ensure customers money gets back to them, but that more commonly energy companies are owed many times more money by people who leave unpaid debts behind them.

He said: “Although companies are working to return money where there are credit balances sometimes former domestic customers provide no new contact details so suppliers don’t know how, or to whom, they can return the money.

“The most common reasons energy companies end up holding funds are when the bill payer has moved home or when a customer dies and suppliers have no record of the next of kin.

“Suppliers already agreed with ministers last year that they would take all reasonable steps to trace customers who leave a credit balance behind.”

He added: “If you think you may be owed money, get in touch with your supplier past and present, to check if they have funds to return to you.”

Back to the top of the page