Been transferred to a new energy firm from a bust supplier? Check you're not paying twice
Many people whose old energy firm has gone bust are having direct debit payments taken by both their new and old firm. This shouldn't happen and is leaving many short of cash – so why is this happening and what can you do?
More than 20 firms have gone bust in recent months, and in each case the advice from regulator Ofgem was not to cancel your regular direct debit payment to the failed supplier. Ofgem chooses a new supplier to take on the failed firm's customers and the new provider is responsible for transferring customers across, including moving across direct debits automatically.
Unfortunately, this hasn't turned out to be the case in practice for some and we've heard from many customers from a variety of firms who have had monthly direct debit payments taken from both suppliers.
The providers we spoke to told us that this would only happen if you set up a new direct debit yourself with the new supplier after it set you up with an account – as at least one firm's online system was wrongly asking new customers to do – otherwise your old direct debit would eventually be automatically transferred across.
While ultimately you won't lose the money, as any overpayment is protected by regulator Ofgem's safety net rules, it can lead to cash flow issues for possibly a number of months.
If you're being charged by the new and old firm, cancel your direct debit now
If you find that you have been charged twice, here's what you can do:
- Cancel the direct debit with the old supplier. According to Ofgem, there's no need to pay both the new and old supplier, so cancel your old direct debit straightaway. Any credit (such as overpayments) you've built up is protected and will eventually be moved across to your new account.
- Let your new supplier know you've been charged twice. It should arrange for the money to be returned or will add to your bill to cover future energy use. However, this could take weeks or even months, as the supplier is reliant on getting this info from your old supplier – and firms have been unable to tell us how long it can take.
- If you need the money back urgently, you can try the Direct Debit Guarantee scheme. You can try contacting your bank and asking it to reverse the payment under the Direct Debit Guarantee. Under the scheme, if an error is made in the payment of direct debits, you are entitled to a full and immediate refund from the bank or building society. As you have paid for a service you no longer get, this should be covered and we've already seen customers have success with this method.
Not sure if you've been charged twice? Check you bank statement
The easiest way to check if you've been charged twice is to simply have a look at your bank statements to see if direct debits are being taken from both the old and new firm.
It's also worth checking how much the old supplier has charged you, as you could get a payment taken to settle your final bill. For example, if you paid, say, £80/month as a regular payment to cover ongoing use with your old supplier and that is still coming out, then you may well have this problem. If it's a different amount, it may be to cover any money you owe on your final bill, so check what that bill says.
'It is a nightmare and has left me short'
We've heard from scores of MoneySavers who have been affected. We've a selection of comments from Facebook and in embedded tweets below.
Lorraine said: "Green have still taken another payment, even after the new direct debit with Shell is up and running, and my previous credit has transferred by the look of it. I've now cancelled Green but surely they shouldn't have taken it after my account has been moved over."
Jane said: "This happened to me. Igloo carried on taking the direct debit even though I had a direct debit set up to the new supplier, E.on. Nightmare and has left me short."
What firms say and what they're doing about it
We contacted all the suppliers who had taken on customers of failed firms that we'd heard had been having direct debit issues. Here's what the providers told us:
- Octopus Energy. It said a 'handful' of former Avro customers set up a new direct debit with it, which duplicated their existing one with Avro.
It said this happened as although Avro customers were told in initial communications not to set up a new direct debit or cancel their old one, online accounts have a notification to set up a direct debit if you don't already have one, so some customers set up direct debits anyway when they first accessed their new Octopus accounts.
Octopus has said customers can contact them if they've been affected to get a refund of the extra payments, or to request a payment holiday.
- Shell Energy. It told us the only reason someone would have two direct debit mandates would be if a customer has set up a new direct debit directly with it and not cancelled their direct debt with the former provider – rather than waiting for Shell to transfer their old one across, which it said will happen in January.
It said it's been working to identify customers that have two direct debits, and has halted payments to itself where it has found any, so do contact the firm if affected.
- British Gas. It told us this shouldn't happen, but if there is any overlap and the customer doesn't owe the old supplier any money, any overpayment will be transferred to their new British Gas account (though it didn't say exactly when).
- EDF. It told us some customers may see more than one payment taken initially by EDF, as gas and electricity accounts often migrate across on different dates, but the combined total would be the same as they were paying to Utility Point previously. After the initial payment is made, this is then combined into one payment for the future. EDF also said that before it sets any direct debit instruction, it ensures Utility Point have cancelled theirs, so you shouldn't overpay.
- E.on Next. It confirmed earlier this month that it couldn't transfer any customers' direct debits from the failed suppliers it took over from – see our Former Igloo, Symbio or Enstroga customer? Set up your direct debit with new supplier E.on now MSE News story for more info.
When we asked it about this issue of paying both the old and new firm, it declined to comment about what this means for customers who might have direct debit mandates from their previous supplier still active.
Guidance on E.on Next's website states that any credit on your old account as of 2 October 2021 will be transferred to E.on Next (it doesn't say when). However, it hasn't confirmed what will happen with any overpayments since then, but Ofgem says your money will be safe. If your account was in debt, administrators will keep the direct debit active to repay it.
If you aren't in debt and have now set up a direct debit with E.on Next (the cheapest way to pay), to be safe, it's best to cancel your old direct debit.
What Ofgem says about double payments
An Ofgem spokesperson said: "Once a direct debit has been set up with the new supplier, there should not be a need for direct debits to be charged by the old supplier or administrator.
"If customers have been charged twice via direct debit, they can cancel their direct debit with their old supplier. If they have concerns, they can contact their new supplier for advice. Ofgem's safety net ensures that customers should always get their credit balance back."
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