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Urgent call for Ofgem to step in after debt collectors contact 130,000 Spark Energy customers

Urgent call for Ofgem to step in after debt collectors contact 130,000 Spark Energy customers

Almost 130,000 Spark Energy customers have been contacted by debt collectors in the wake of its takeover by Ovo Energy, even though many have continued making normal payments and had no idea they owed any money, MoneySavingExpert.com can reveal. If you've had a letter, text or email from a debt collection firm, don't panic – we've full help on what it means and what you need to do.

Small supplier Spark Energy went into administration last November and was taken over by Ovo Energy. At the time, the energy regulator Ofgem told its 290,000 customers to carry on paying direct debits or making other payments as usual.

However, many customers are now being chased for payment because outstanding balances on accounts on 28 November were not moved over to Ovo Energy, but instead passed to Spark Energy's administrators KPMG. Customers were given a new Spark Energy account – and direct debits and other payments were credited against future payments rather than outstanding balances.

KPMG issued a press statement in November warning that customers with outstanding balances could be contacted by "a third party", but admits the first direct communication customers received after that was from a debt collection agency.

We've heard from several customers who had no idea they had an outstanding balance, had still been making payments and were shocked and alarmed to have been contacted by debt collectors out the blue. One email we've seen from a debt collector warns "failure to repay this account in line with your agreement could have had a negative impact on your credit rating and will possibly continue to do so until this matter is resolved".

Ofgem's told us it's aware that Spark Energy customers have been contacted by debt collectors and has said it's "in touch with Ovo Energy about this matter". MoneySavingExpert founder Martin Lewis has called on the regulator to step in.

'Ofgem must urgently intervene'

Martin Lewis said: "This is an outrageous situation and we're calling on Ofgem to urgently impose a freeze on all of this debt collection action.

"For many people who were simply operating their account as they were supposed to and paying their direct debits, to suddenly get emails from debt collectors is intimidating, fearsome and at worst can risk impacting some people's mental health and stress levels.

"You would expect to be contacted by the company that had taken over your supply and to see your direct debit being altered to make up for any debts. In the normal course of events, if you run up a little bit of debt with an energy company then small alterations are made to your direct debit. You do not suddenly have the debt called in.

"The Ofgem safety net is supposed to ensure continuity of supply and operation. This clearly falls foul of the spirit of that safety net if not the letter of it.

"We know people who've got these emails and understandably their instincts are 'this is a scam or a fraud' as they're not aware of any debts. And we must be careful no action is taken against these people due to the collective dire communication.

"I would urge Ofgem not to be a passive bystander and simply allow energy users to come to harm due to prevarication. It needs to intervene."

'No one had told me about the outstanding balance'

MoneySaver Daniel, 28, from Berkshire, told us he paid his Spark Energy direct debit as usual on 3 December thinking this would cover his November energy use. He was then stunned to find he was contacted by debt collection agency Opos.

He said: "I was contacted by the debt collection agency for an outstanding balance I'd never been made aware of. After spending an hour on hold to Spark Energy's customer service helpline, I was told my direct debit had been paid to my new account, meaning the old account still had an outstanding balance. No one had told me about the debt at all."

Daniel's not the only MoneySaver to have been caught by surprise. We've been emailed by 10 other Spark Energy customers who say they've been chased by debt collectors despite continuing to make their usual payments on their accounts. 

One MoneySaver, Vicky, told us: "I'm being chased by a debt collection agency even though I've always paid my bill, and my mental health is suffering under this stress." And another said he was convinced the email was a scam with some correct info "to make it believable".

Another Spark Energy customer told us he was concerned about being contacted by debt collectors while in the middle of a mortgage application: "I'm being chased for a debt of £82 for electricity used over a week in November. I have no idea what this amount is based on... I'm in the process of sorting my mortgage and this could have a major impact."

We've also seen another nine reports on social media from customers with similar experiences, including this one:

Why are debt collectors chasing payment?

When Spark Energy stopped trading in November 2018, Ofgem appointed Ovo Energy to take on all the firm's customers. Ovo took over Spark Energy's operating company and brand, meaning customers carried on being billed by Spark Energy and dealing with Spark Energy customer service.

Customers were told to continue paying their direct debits or prepayment top-ups, and that they would be contacted by Spark Energy's administrators, or Ovo Energy under the Spark brand, about any money they owed to Spark Energy.

These customers had new Spark Energy accounts created for them, and any payments made as normal after 28 November 2018 were credited to the new accounts instead. In some cases, these payments simply built up credit on the new accounts – in other cases, the first payment was used as a security deposit for those who chose not to pay by direct debit. 

Meanwhile, the balance on customers' old accounts remained unpaid and became the responsibility of KPMG. It says it then appointed third party debt collection agencies to contact customers with outstanding balances – it hasn't named these agencies, but customers we've spoken to mainly say they've been contacted by Opos Limited.

I've been contacted by debt collectors – what do I do?

If you're sent a letter, email or text from a debt collector out of the blue, it can be very worrying. Don't panic, but don't ignore it either as you do need to act on it.

While many have told us they've been confused by the communications – and some have even said they thought it was some kind of scam – as explained above, it's likely the money being chased is the outstanding balance on your Spark Energy account as of 28 November 2018.

  • If you agree this is what you owe, KPMG says you should arrange to pay the debt collection agency as soon as possible. However if you're unhappy and want to complain, you can do so. You should normally contact your supplier – in this case Spark Energy – first. It's unclear if it'll be able to handle a complaint about this debt collection issue, but if it can't, you can escalate your case to the Energy Ombudsman.

  • If you don't think you have an outstanding balance, or you disagree with the amount being requested by the debt collectors, contact Spark Energy on its customer service helpline on 0345 034 7474 or via online chat.

KPMG says customers who have been contacted by debt collection agencies won't have their credit files marked as long as they pay off the outstanding balance.

If you're having difficulty paying off your existing balance, you should be able to work out a repayment plan with the debt collection agency. But if you're struggling, you can contact organisations such as Citizens Advice and StepChange for help – see our Debt Help guide.

What do the administrators say?

A KPMG spokesperson said: "Ovo Energy is applying customer payments towards the future supply of electricity and gas. As such, this has required the joint administrators, via appointed third party agents, to make contact with customers and seek payment of the pre-administration energy consumption.

"The use of third-party agents was the only feasible means of making contact with the thousands of customers. The joint administrators appreciate that these arrangements have resulted in queries from some customers... The joint administrators would like to thank customers for their patience and understanding."

The spokesperson told us that almost 130,000 Spark Energy customers had been contacted by debt collectors.

A Spark Energy spokesperson said: "We are aware that during the transition process administrators are collecting pre-SoLR [Supplier of Last Resort] debt, which may have confused customers. With this in mind, we have made proactive efforts to work with the administrators and communicate with customers as clearly as possible."

What does Ofgem say?

We've asked Ofgem a series of questions about this issue and specifically whether Spark Energy customers should have been contacted by debt collectors. However, it's refused to give us specific answers – it says it's looking into the matter further.

An Ofgem spokesperson said: "We are aware of the communications that a number of Spark Energy customers have received and are in touch with Ovo Energy about this matter."