Fury as Iresa suddenly hikes direct debits - even for customers in credit

Many have taken to the MoneySavingExpert.com Forum and other social media to complain about their direct debits increasing by as much as 20%, while some have also been charged an additional one-off payment.

On top of this, Iresa customers have reported long call times when trying to get through to customer services, and say they are struggling to get responses to queries via email and social media.

Iresa is a firm we’ve long warned against in our switching info due to poor customer service. Energy regulator Ofgem has confirmed it's aware of the latest concerns, and it's discussing customer issues with Iresa.

If you're unhappy with Iresa, consider switching supplier – see our Cheap Energy Club to do a comparison and see if you can save.

Who is Iresa?

Iresa began supplying gas and electricity to households in Britain in March 2016, and has about 100,000 customers.

It's often been the cheapest on the market (based on typical use) since it launched, and so has appeared at the top of many people's energy comparison over the past few years.

Our Cheap Energy Club first received a number of reports from users struggling to get in contact with the supplier early last year – leading us to put up a warning message about this on our energy comparison results last July.

'Iresa are taking the P'

We've seen dozens of complaints from Iresa customers since the start of the year about three main issues – hikes to monthly direct debit payments, requests for one-off payments and difficulties contacting the company. Here are a few examples:

An email from Iresa to one Cheap Energy Club user, seen by MoneySavingExpert, shows that his direct debit has been increased from £89 to £108 a month – even though the user told us he was in credit by more than £180. The email said: "We have made the decision to increase your direct debit amount to £108, so that a credit balance can be built up. This is in anticipation of the changes in energy usage in the coming months."

Why has Iresa done this?

According to the supplier, it's allowed to increase direct debits under 4.6 of its terms and conditions, which states: "You agree to pay us by direct debit in an agreed fixed amount in advance each month, calculated to cover your supply over the year and to keep your account in credit at all times."

It's not clear what calculations have led to the change. However, one common explanation for sudden rises in a direct debit is when users come to the end of a fixed-term tariff, and their direct debit is increased on the assumption that they will move to a more expensive standard variable tariff and so pay more over the next 12 months.

Some users have also been told they have to pay a one-off "balancing charge". Iresa insists customers shouldn't have been asked to pay this if their account was in credit after their December 2017 bill, though some of those hit by a direct debit increase ARE in credit.

A spokesperson for Iresa said: "We review our customers' accounts periodically. Where we identify variances from expected usage, the direct debit level is adjusted to reflect a revised expectation of energy consumption based on actual usage patterns and a balancing charge is made to settle the historic shortfall on the account.

"This charge takes the form of a one-off payment and is requested to cover the variation between expected usage and actual usage. We encourage customers to get in contact with us regarding any further queries they may have."

When asked about the increase for those who are in credit, the spokesperson added: "As stated in their contract, customers pay for their energy supply one month in advance. If the balance on their account is not sufficient to cover their supply over the year, their direct debit will be raised to ensure they remain in a credit position at all times."  

I've been affected – what can I do?

If you've been told your direct debit will increase or asked to make an unexpected one-off payment, here's what you can do about it:

• See if you can switch and save. If you believe the hike to your direct debit is too high and you're unhappy, see if you can save by switching away penalty-free – Iresa doesn't charge any exit fees. To do this, do a full comparison on Cheap Energy Club.

• Even if you stay with Iresa, challenge the direct debit increase or one-off charge. If you've been told your direct debit will increase you have the right to challenge it – Ofgem rules state direct debits must be fair so ask if it can be dropped. See our Energy Direct Debits Help guide for how to fight back, including a template letter to make a formal request.

• If you've a lot of credit on your account, ask for a refund. If you're heavily and disproportionately in credit, ask for a chunk of the amount you've overpaid back. According to Ofgem, suppliers must refund an accumulated credit – though it can be a grey area, as there are no official guidelines on what the threshold is for a refund.

I'm struggling to contact Iresa – what can I do?

Iresa told us: "We encourage customers to get in contact via phone, email or on our Facebook and Twitter regarding any further queries they may have."

However, many have said they've struggled to get in contact with the supplier, and when we tried on Friday afternoon we were kept on hold for over an hour before speaking to someone.

You can call Iresa on 0115 727 0982. If you can't get in contact with it, you may want to raise a formal complaint. You can do this direct with Iresa or via the free Resolver tool. If you fail to get a response to your formal complaint, or the issue doesn't get resolved within eight weeks, you can then take it to the independent Energy Ombudsman.

On its long waiting times, Iresa said: "We apologise that you were unable to reach us and we apologise to the customers who have been unable to get into contact. This is temporary and we are currently looking into the issue."

'This sort of behaviour should be ringing massive alarm bells'

Archna Luthra, head of energy at MSE, said: "Iresa has had a swathe of poor feedback from its customers but this is one step too far and quite frankly unacceptable. This sort of behaviour should be ringing massive alarm bells in Ofgem's ears.

"If you're currently a customer of Iresa and not happy, switch away to a provider with better service.

"And for those that haven't switched, don't let this put you off. There are plenty of providers out there – some new, some established – that have excellent customer service. The savings can still be in the hundreds. There are many customer service ratings out there you can check before you switch, including the ones on our own Cheap Energy Club. We also publish warnings where we've had poor feedback – as in the case of Iresa."

An Ofgem spokesperson told us: "We are aware of concerns. We are discussing customer service issues with Iresa."