MSE News: Probe finds energy firms failing customers in debt

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This is the discussion thread for the following MSE News Story:

"Gas and electricity suppliers are often hitting those in debt with exorbitant repayment demands ..."
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  • suppliers often fail to take into account customers' ability to pay
    ability my !!!!
  • undauntedundaunted Forumite
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    In my opinion Ofgem & Consumer Focus also fail customers with debts. The so called "deemed contract" combined with the "right of objection" to transfer means those who struggle are frequently denied the most competitive deals. Until these issues are addressed the problem will probably never be solved.

    Ofgem are of no help to consumers whatsoever in my experience!
  • think the regulators need to look at the reasons for debt increases, is it because the people are just not paying or are they been tied up with false disputes.
  • edited 3 June 2010 at 9:57PM
    CardewCardew Forumite
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    edited 3 June 2010 at 9:57PM
    undaunted wrote: »
    In my opinion Ofgem & Consumer Focus also fail customers with debts. The so called "deemed contract" combined with the "right of objection" to transfer means those who struggle are frequently denied the most competitive deals. Until these issues are addressed the problem will probably never be solved.

    Ofgem are of no help to consumers whatsoever in my experience!

    The 'deemed contract' was introduced in the Gas and Electricity Acts of Parliament to benefit consumers. The purpose was to allow new occupants to move into a property without finding that the gas and electricity had been cut off when the old occupant left. That was the situation many years ago - you applied to the companies to have gas and electricity connected and people had to wait until the electricity man came and connected the property.

    Nobody is forced to have a deemed contract. You can apply for the supply to be switched to the supplier of your choice in advance of moving into the property; albeit it could well delay your occupation.

    I am certain the gas and electricity companies would welcome the end of 'deemed contracts'. It would mean they could refuse to offer credit terms to customers they considered not worthy of credit. Insist on a deposit or a pre-pay meter installed at the customers expense.

    It also makes sense to refuse to allow customers to move if they have a large debt. Nothing is more certain than some customers would move from company to company leaving a trail of debts they would have no intention of ever paying.
  • edited 4 June 2010 at 5:14PM
    undauntedundaunted Forumite
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    edited 4 June 2010 at 5:14PM
    Cardew wrote: »
    The 'deemed contract' was introduced in the Gas and Electricity Acts of Parliament to benefit consumers. The purpose was to allow new occupants to move into a property without finding that the gas and electricity had been cut off when the old occupant left. That was the situation many years ago - you applied to the companies to have gas and electricity connected and people had to wait until the electricity man came and connected the property.

    Nobody is forced to have a deemed contract. You can apply for the supply to be switched to the supplier of your choice in advance of moving into the property; albeit it could well delay your occupation.

    I am certain the gas and electricity companies would welcome the end of 'deemed contracts'. It would mean they could refuse to offer credit terms to customers they considered not worthy of credit. Insist on a deposit or a pre-pay meter installed at the customers expense.

    It also makes sense to refuse to allow customers to move if they have a large debt. Nothing is more certain than some customers would move from company to company leaving a trail of debts they would have no intention of ever paying.

    Whether the deemed contract is ever of benefit is debatable.

    There is, in my opinion no reason that anyone buying a house (or indeed renting) should and the energy supplier should not be both able and required to enter into an express contract prior to moving in.

    I have seen no evidence whatsoever of energy companies seeking the end of deemed contracts - can you provide any?

    It is also currently used to to the suppliers benefit to block transfers elsewhere where a debt exists, despite the customer never having entered into an express contract or the supplier having sought to encourage them to do so.

    I believe that some companies already seek to insist upon pre payment meters, depsoits etc if aware of any past issues. As to large debts a more proactive approach in ensuring that really large debts do not accrue in the first place would be beneficial to all. Customers who are seriously intent on avoiding payment could of course simply move house!

    There is however a civil debt recovery process available to all in this country and Fuel Direct for the u/e and energy co.s. Denying some of the most vulnerable customers (eg financial difficulties, unemployed) the right to transfer to the most competitive deals in the meantime is surely morally unjustifiable.

    If you believe this an unreasonable view I would also refer you to the text from Ofgem, Consumer Focus, CAB etc criticising energy co.s on debt issues in this thread yesterday and ask you why you believe they make these statements?
  • davidgmmafandavidgmmafan Forumite
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    "Insist on a deposit or a pre-pay meter installed at the customers expense."

    To be honest I am astounded energy companies don't insist on a deposit for people who want to set up a quarterly bill. Surely it wouldn't be unsreasonable to ask for £50 up front?

    I most certainly agree mosre needs to be done to manage debts, so they don't get out of hand. However I also know some people simply will not listen. You say your consumption is this, you owe £500, therefore the payment needs to be X.

    "But I don't want to pay that."

    I'm going to try that next time I go shopping...

    Blame on both sides, its fun to beat up on energy companies but customers have a part to play in this.
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  • CardewCardew Forumite
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    undaunted wrote: »
    Whether the deemed contract is ever of benefit is debatable.


    There is, in my opinion no reason that anyone buying a house (or indeed renting) should and the energy supplier should not be both able and required to enter into an express contract prior to moving in.

    I have seen no evidence whatsoever of energy companies seeking the end of deemed contracts - can you provide any?

    It is also currently used to to the suppliers benefit to block transfers elsewhere where a debt exists, despite the customer never having entered into an express contract or the supplier having sought to encourage them to do so.

    I believe that some companies already seek to insist upon pre payment meters, depsoits etc if aware of any past issues. As to large debts a more proactive approach in ensuring that really large debts do not accrue in the first place would be beneficial to all. Customers who are seriously intent on avoiding payment could of course simply move house!

    There is however a civil debt recovery process available to all in this country and Fuel Direct for the u/e and energy co.s. Denying some of the most vulnerable customers (eg financial difficulties, unemployed) the right to transfer to the most competitive deals in the meantime is surely morally unjustifiable.

    If you believe this an unreasonable view I would also refer you to the text from Ofgem, Consumer Focus, CAB etc criticising energy co.s on debt issues in this thread yesterday and ask you why you believe they make these statements?



    The default position now is that people move into a property and start using gas and electricity and thus running up a bill with an energy company. This energy company have no idea, unless the customer contacts them, who the occupants are or when they moved in; let alone their suitability to receive credit.

    If you care to read the evidence of the Utility companies to the Parliamentary Committee on Energy - links were given on MSE - this was raised as a concern.

    Perhaps you can point to where I stated(or implied) that the Utility companies were seeking to end the system of deemed contracts. As the 'deemed contract' provision was an integral part of the Gas and Electricity Acts under which the companies obtained their licence, they are hardly in a position to change the system.

    So as you contend the 'deemed contract' is part of the problem, what is your solution?
    There is, in my opinion no reason that anyone buying a house (or indeed renting) should and the energy supplier should not be both able and required to enter into an express contract prior to moving in.

    As I explained in my earlier post(perhaps you didn't read it?) anyone is at liberty to do exactly as you say i.e. enter into an express contract prior to moving in, and never enter into a deemed contract; as some people have done.

    This has been discussed previously. The difficulty is that no action can be taken until the old occupants have moved out and given their final meter readings.

    No company can take action to take over the supply until the property is occupied by the new owner/tenant. "Hallo my name is David Cameron and I intend to move into No 10 Downing street in 6 weeks time on May 6th so start the process of closing that fellow Brown's account so it is in my name on 7th May";)

    So without a deemed contract, you will not be able to use any gas/electric in the property until the account is in your name with the 'express contract' you desire; and that could be weeks.

    I cannot think of a possible way that the deemed contract acts to the detriment of new occupants:

    1. You don't have to have a 'deemed contract' - see above.

    2. People move into a property with connected gas and electricity as soon as it becomes vacant.

    3. You can take immediate steps to end the deemed contract as soon as you move in; if you wish to move to a cheaper tariff with the same company it will be backdated to the day you moved in. If you wish to move to another company it will take 6 weeks or so.


    So as you feel any benefit of the 'deemed contract' is debatable, please debate and give the counter view!

  • Blame on both sides, its fun to beat up on energy companies but customers have a part to play in this.

    It is when your on a pre-paymant meter, have been since your choice was British Gas or YEB, And still managed to get into arrears because they could not be bothered to update the meter, defeating the purpose, and the premium i was paying at the time to not end up in debt.

    A premium that was supposed to cover the extra cost of keeping the meters up to date, so who was taking who for a ride?

    In doing so, it has barred me from switching several times, enough for me to wonder if that was the intention once the market was opened up.

    Of course nowadays, if a supplier allows a pre-paymant customer to build up arrears, they have to write it off.

    So you would have thought they would be more prudent, nope, EON had to write of £350 last year, because they could not be 'bothered' to keep the meter up to date.

    It would have been more, but my nice side would not let me give them any more rope to hang themselves.

    So i am glad you said there is blame on both sides, but in some cases its more one side than the other.
  • CardewCardew Forumite
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    It is when your on a pre-paymant meter, have been since your choice was British Gas or YEB, And still managed to get into arrears because they could not be bothered to update the meter, defeating the purpose, and the premium i was paying at the time to not end up in debt.

    A premium that was supposed to cover the extra cost of keeping the meters up to date, so who was taking who for a ride?

    In doing so, it has barred me from switching several times, enough for me to wonder if that was the intention once the market was opened up.

    Of course nowadays, if a supplier allows a pre-paymant customer to build up arrears, they have to write it off.

    So you would have thought they would be more prudent, nope, EON had to write of £350 last year, because they could not be 'bothered' to keep the meter up to date.

    It would have been more, but my nice side would not let me give them any more rope to hang themselves.

    So i am glad you said there is blame on both sides, but in some cases its more one side than the other.

    You are quite correct that with the old meters it was possible to run up large debit balances because the prices on the meter had not been updated.

    The logistics of updating literally millions of meters within a short period after the price price made it impossible - especially as in many cases access to the meter cannot be obtained; it would have taken tens of thousands of people with all the associated costs. However doubtless some companies got extremely lax as they could adjust the meter to recover debt when they did finally gain access to the meter.

    It was as a result of 'pressure' applied in Parliament that some companies decided to write off such debts - other didn't.

    Although pre-pay tariffs used to be more expensive, the revenue from those extra costs did not cover the costs to administer the pre-pay meters.

    The reduction in pre-pay tariffs to bring them in line with standard tariffs has not changed the fact that they are more expensive to administer.
  • The solution is to stop creating legislation and budgets to help people, and actually help people.

    We need to recruit, brainwash and train an army of civil servants who will forcibly remove poor people from their badly insulated mouldy homes, and force them into building decent, well insulated homes. These are then housed and trained and brain washed into repeating the cycle.

    Just as the environmentalists are realising, democracy and human rights are obstacles to saving the world, so is the welfare state an obstacle to self-help.
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