Yahoo Finance Energy suppliers branded ‘loan sharks’ after clinging on to billions of customers’ cash
Energy suppliers have been accused of “acting like loan sharks” by making it too difficult for customers to reclaim credit owed to them.
Companies are meant to hand back credit upon request, but MPs and charities warned that over-complicated processes meant customers were effectively unable to claim back billions of pounds. According to a Telegraph Freedom of Information request, energy suppliers held £9bn in credit as of November 30 last year.
Customers have complained of their direct debits being substantially increased while they have hundreds of pounds of credit in their account.
Alexander Stafford MP, who sits on the energy select committee, said: “Companies who withhold their customers' own money are no better than loan sharks.
“How can it be acceptable to ask busy, hard-working people to send email after email or make call after call just to get their own money back?”
Ofgem, the energy watchdog, has defended the amount of money collected, arguing that it helped “spread the cost of the more expensive winter months” across the year.
Peter Smith, of the charity National Energy Action, said that households “shouldn’t have to navigate a web of complex processes to claim back their own money” and that this should be “as easy as possible”.
According to the watchdog, suppliers must refund customer credit promptly after a request unless they have “reasonable grounds” not to do so. However experts said often the refund process required spending hours on the phone to suppliers.
Concerns have been raised by the ex-Ofgem board member Christine Farnish that this credit – which most firms do not ringfence – was being used for cheap financing and day-to-day spending.
Consumer expert Jane Hawkes said it was unacceptable that people had to “jump through multiple hoops” to access their own money.
She continued: “It only adds salt to the wound that the responsibility for the £9bn of credit accumulated lies with the energy providers themselves and not customers. If the shoe was on the other foot they would be knocking firmly on our doors and adding interest.”
Gill Cooper, of Citizens’ Advice, said it was “more important than ever” for companies to make sure they were transparent with customers about their credit balance given the cost of living crisis.
She added: “It’s also important that companies are at the end of the phone to help if needed – particularly for people who can’t get support online.”
Dhara Vyas, of trade body Energy UK, said: “Customers can request credit back from their supplier who must either refund the amount requested or explain why.”
