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MSE News: 30% of British Gas, Octopus & Shell Energy customers say their direct debits have DOUBLED

Many protected by price cap should only see rises of around 54%

9 May 2022

At least 30% of British Gas, Octopus Energy and Shell Energy customers who were in credit and on price-capped tariffs told the UK’s biggest consumer website, MoneySavingExpert.com (MSE), that they've seen their direct debits double – even though the price cap rise is half that, at 54%. Across all firms, 25% of customers in this situation reported direct debits doubling or more.

MSE analysed the responses of the over 41,000 people who chose to reply to its investigative survey. Almost half (46%) of those whose payments had doubled said they hadn't challenged the increase with their supplier because they didn't know they could (see MSE’s tips on how to challenge your direct debit.)

MSE will be reporting its detailed findings to energy market regulator Ofgem, the Department for Business, Energy & Industrial Strategy (BEIS) and the Business Committee of the House of Commons.

Thousands see payments rise by more than the 54% price cap increase

MSE’s survey was conducted between 26 April 2022 and 3 May 2022 and was self-selecting (so those angry with their direct debits will likely have responded more frequently). Yet even if the proportions are skewed as a result, the survey reveals a material number of people reporting their direct debits doubling.

Direct debit increases for customers who are in credit and on price-capped tariffs

Firm (number of responses in this category)

Average (median) increase in direct debit

Percentage whose direct debit has at least DOUBLED

British Gas/Scottish Gas (373)

72%

33%

Octopus Energy (536)

80%

32%

Shell Energy (294)

70%

30%

E.on/E.on Next (620)

71%

27%

EDF Energy (315)

64%

25%

Outfox the Market (144)

57%

23%

Scottish Power (208)

67%

22%

Bulb (981)

62%

21%

Ovo Energy (256)

54%

15%

SSE (284)

52%

15%

All firms (4,177)

66%

25%

Table includes firms with 100+ respondents who told us they: 1) pay by fixed direct debit; 2) were in credit with their supplier when their direct debit was increased; and 3) had not changed tariff in the past three months but had stayed on the price cap. 'All firms' includes all energy companies, not just those firms with 100+ responses listed above.

Martin Lewis, founder of MoneySavingExpert.com, said: "Fixed monthly direct debit is how up to 80% of those in England, Scotland and Wales pay for energy bills. The theory is a good one: your annual cost is divided by 12 so you pay the same amount each month, smoothing out high-use winter and lower-use summer costs.

"Yet for months I've heard from people shocked to be told their direct debits are increasing two- or threefold. Scarily, for some people this is reasonable. Those coming off cheap fixes, moving to expensive fixes, or who are in energy debt would expect to see their direct debit rise by more than the already hideous 54% increase in the energy price cap.

"So to test what's really happening, we analysed responses only from those in credit who were on, and remain on, a price capped tariff – as they should only be seeing rises in line with the price cap – roughly 45% to 65%. Yet even then, on average many report higher rises, and a quarter say they were told to pay double what they were paying previously. That smells wrong to me.

"While a higher direct debit doesn't mean you pay more in the end – any overpayments are ultimately due to be repaid – it does mean far too much cash flowing from accounts now, which is often a nightmare amid the cost of living crisis.

"Yet under firms' licence conditions you have a right to a fair direct debit. So if you're in credit, have been on a standard variable (price-capped) tariff for six months or more, and your direct debit has gone up by far too much: submit an up-to-date meter reading first, then speak to your supplier and politely ask it to justify the rise. If it can't, request that it is lowered. If it refuses, make a formal complaint and take it to the Energy Ombudsman."

The biggest increases are for those coming off fixed deals

Looking across the wider market – for customers paying by fixed direct debit – those coming off fixes said they'd seen their direct debits rise the most. This is to be expected as they were likely on the cheapest tariffs and are now moving to the price cap.

Tariff-by-tariff average direct debit increases

Tariff type (number of responses)

Average (median) increase in direct debit

Percentage whose direct debit has at least DOUBLED

Fix ended & fixed again (1,606)

96%

46%

Firm went bust & moved to price cap (3,068)

87%

41%

Fix ended & moved to price cap (5,488)

87%

38%

Was on price cap but chose to fix (284)

81%

37%

Was and still on price cap (4,177)

66%

25%

Was on fix and still on the same fix (1,593)

60%

24%

Table includes responses from users who told us they: 1) pay by fixed direct debit; and 2) were in credit with their supplier when their direct debit was increased.

Some energy firms dispute the results
Octopus Energy initially told MSE its own analysis of customer account data showed only 0.84% of those in credit who'd been on its standard tariff for over three months had seen their monthly payments double, with a median increase of 59%. However, it now says the correct figure for doubled payments is 15% (with the same median increase of 59%). British Gas told MSE the higher than average increase could be down to the fact it offered an option for customers to freeze their direct debits at their existing levels last winter.

MSE will be submitting its research to Ofgem to aid it with its investigation to see if firms can formally justify their increases. 

-ends-

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