MSE News: Probe finds energy firms failing customers in debt

davidgmmafan

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

Prepayment I agree, there are also problems with direct debits not being reassessed frequently enough. However it depends on the cirumcumstances. Some people steadfastly refuse to allow meter readers access, or give customer readings, then whinge when they get a massive catch up bill.

I spoke to a customer the other day who over almost three thousand pounds and wanted his payments reduced, even though it would already take 14 months to clear the balance alone. Again blame on both sides (poor credit management), but if your bill shows a steadily increasing balance it falls to you as an individyal, as well as the company, to do something about it.

Same with refunds or reassessments of payments which are very low. Often customers say this isn't my fault, then in the same breath say I knew that was wrong. If I knew something was wrong I'd check it out, not just wait around for something negative to happen!

undaunted

Cardew wrote: »

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.

Certainly, I read this as stating / implying such

Cardew wrote: »

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.

undaunted

Cardew wrote: »

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.

So as you contend the 'deemed contract' is part of the problem, what is your solution?



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!

I haven't seen the evidence you refer to but would appreciate a link if you have one readily available.

I do not believe that credit worthiness is necessarily almost foremost in an energy suppliers mind - I could tell you of a specific Npower case where this was so, it is not speculation or mere opinion.

I do not see in what way the so called "Deemed Contract" benefits the consumer. It appears to be an Ofgem, but in my opinion nonsensical argument that energy could not be consumed without one. In fact you probably daily or weekly by all manner of goods quite legally without a contract - eg food, petrol / diesel (though I appreciate you generally then pay for it immediately).

Energy companies are "expected" (Ofgems words) to form an express contract but often make no effort to do so and suffer no consequence for it. If there was a legal obligation to form an express contract within a reasonable specified period or the right of objection could not be combined with the deemed contract ( I believe there is no such right on business contracts?) then I would see lesser problem with the two aspects. At present I believe they are widely at odds with various UK (and indeed EU) Consumer Protection Legislation.

I would agree with your point that those incoming consumers (and indeed long standing resident consumers with the means to clear any debt in full) can escape the deemed contract / energy co. of their choice. It is however those who are most vulnerable, eg the unemployed, those with financial difficulty etc who find themselves locked into uncompetitive terms and unable to do so despite never having entered into any "true" contract

As to an alternative solution, given that a home buying (or renting) process is usually conducted by two solicitors, there is an identifiable buyer and an identifiable seller, compatible time scales etc I fail to see any reason that a proper and express contract could not be formed for energy supply ready for completion (just as it is for the transfer of ownership / tenancy of the house, or at worst within a very short period thereafter)

Whilst there may be some Solicitors cost incurred to each party (apparently an Ofgem objection) I do not see that as justification for not adopting a system which would be both more in accordance with Consumer Protection requirements and beneficial to energy providers

Although I have no more detail I understand that Consumer Focus are themselves working on something with regard to deemed contracts

KimYeovil

undaunted wrote: »

I would agree with your point that those incoming consumers (and indeed long standing resident consumers with the means to clear any debt in full) can escape the deemed contract / energy co. of their choice. It is however those who are most vulnerable, eg the unemployed, those with financial difficulty etc who find themselves locked into uncompetitive terms and unable to do so despite never having entered into any "true" contract

As to an alternative solution, given that a home buying (or renting) process is usually conducted by two solicitors, there is an identifiable buyer and an identifiable seller, compatible time scales etc I fail to see any reason that a proper and express contract could not be formed for energy supply ready for completion (just as it is for the transfer of ownership / tenancy of the house, or at worst within a very short period thereafter)

Whilst there may be some Solicitors cost incurred to each party (apparently an Ofgem objection) I do not see that as justification for not adopting a system which would be both more in accordance with Consumer Protection requirements and beneficial to energy providers

Vulnerable customers are more likely to be exploited by your proposal than existing deemed contracts. The agents/solicitors would pocket the commissions. Despite that the agents would still charge their fees. The agents are more likely to have incentives to tie the vulnerable to uncompetitive or tariffs with penalties. I can see no advantages to your suggestion whatsoever.

And your examples of 'vulnerable' customers are not the genuinely 'vulnerable'. They (the truly vulnerable) would face penalties orders of magnitude more savage than those currently incurred by lazy or foolish deemed tariff inheritors.

spiro

Cardew wrote: »

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";)

You can contact a supplier in advance of moving in to get them to be your supplier and the registration would be marked as a 'change of tenant'. The old supplier at the property can object to the CoS as can the existing tenant when his supplier advises him. This is within the design and rules of how the electricity registration process.

In terms of debt managament, as an when Smart meters are rolled out it is highly likely that they will operate in both credit and PAYG mode and therefore the second you fail to pay your bill the supplier can swap you to PAYG. Currently it can take suppliers weeks/months to get a ppm fitted by which time the customer has run up debt and them says 'I can only repay £3 per week' which we all have to pay for.

Mankysteve

I think more advice from power companies to new customers. When switching names on bills compulsory meter reading and also every quarter. I not an expert but I bet most people who get it debt is from simple not doing this then all of sudden once a year a meter reader comes around all of sudden they get a big bill that can't afford.

Cardew

undaunted wrote: »

I haven't seen the evidence you refer to but would appreciate a link if you have one readily available.

I do not believe that credit worthiness is necessarily almost foremost in an energy suppliers mind - I could tell you of a specific Npower case where this was so, it is not speculation or mere opinion.

I do not see in what way the so called "Deemed Contract" benefits the consumer. It appears to be an Ofgem, but in my opinion nonsensical argument that energy could not be consumed without one. In fact you probably daily or weekly by all manner of goods quite legally without a contract - eg food, petrol / diesel (though I appreciate you generally then pay for it immediately).

Energy companies are "expected" (Ofgems words) to form an express contract but often make no effort to do so and suffer no consequence for it. If there was a legal obligation to form an express contract within a reasonable specified period or the right of objection could not be combined with the deemed contract ( I believe there is no such right on business contracts?) then I would see lesser problem with the two aspects. At present I believe they are widely at odds with various UK (and indeed EU) Consumer Protection Legislation.

I would agree with your point that those incoming consumers (and indeed long standing resident consumers with the means to clear any debt in full) can escape the deemed contract / energy co. of their choice. It is however those who are most vulnerable, eg the unemployed, those with financial difficulty etc who find themselves locked into uncompetitive terms and unable to do so despite never having entered into any "true" contract

As to an alternative solution, given that a home buying (or renting) process is usually conducted by two solicitors, there is an identifiable buyer and an identifiable seller, compatible time scales etc I fail to see any reason that a proper and express contract could not be formed for energy supply ready for completion (just as it is for the transfer of ownership / tenancy of the house, or at worst within a very short period thereafter)

Whilst there may be some Solicitors cost incurred to each party (apparently an Ofgem objection) I do not see that as justification for not adopting a system which would be both more in accordance with Consumer Protection requirements and beneficial to energy providers

Although I have no more detail I understand that Consumer Focus are themselves working on something with regard to deemed contracts

I really cannot understand your reasoning.

Nobody is locked into any form of contract! As explained above, they are free not to enter the deemed contract or may leave that contract without penalty as soon as they can arrange another supplier - or a more competitive tariff with the same supplier.

The deemed contract is at standard rates and it simply ensures is that if you choose to use any gas/electricity in the property, you have to pay for that energy.

As for your contention that two solicitors are involved in arranging for someone(particularly 'the most vunerable and/or unemployed') to rent a property - was that a serious statement?

undaunted

KimYeovil wrote: »

Vulnerable customers are more likely to be exploited by your proposal than existing deemed contracts. The agents/solicitors would pocket the commissions. Despite that the agents would still charge their fees. The agents are more likely to have incentives to tie the vulnerable to uncompetitive or tariffs with penalties. I can see no advantages to your suggestion whatsoever.

And your examples of 'vulnerable' customers are not the genuinely 'vulnerable'. They (the truly vulnerable) would face penalties orders of magnitude more savage than those currently incurred by lazy or foolish deemed tariff inheritors.

Agents, solicitors commissions, were did I suggest anything of the kind. The Solicitor charges a fee to complete the house sale. IF the client requires them to liaise with energy co.s there would obviously be a fee incurred. If however the client is happy to take on that role and the solicitor is only required to see that a contract is formed fees would be minimal and no commissions involved.

Your assertions on people as foolish or lazy are nothing more than a personal and ill informed opinion. All kinds of people hit financial difficulty and uneployment - there's been a recession on you know!

The benefit would be that all energy consumers would have an express contract with a supplier of their choosing - seems simple to me.

undaunted

Cardew wrote: »

I really cannot understand your reasoning.

Nobody is locked into any form of contract! As explained above, they are free not to enter the deemed contract or may leave that contract without penalty as soon as they can arrange another supplier - or a more competitive tariff with the same supplier.

The deemed contract is at standard rates and it simply ensures is that if you choose to use any gas/electricity in the property, you have to pay for that energy.

As for your contention that two solicitors are involved in arranging for someone(particularly 'the most vunerable and/or unemployed') to rent a property - was that a serious statement?

That is just not so Cardew. If you have a debt (deemed contract or not I accept) and cannot clear it then you cannot escape the "deemed contract" (or perhaps supplier) for the most competitive terms due to the "supposed" right of objection to transfer. I can understand they need paying but see no reason Fuel Direct etc could not be applied without forcing them to buy further supplies on uncompetitive terms

I am not suggesting that Solicitors need to be heavily involved, (eg the client, Community Legal Advice Centre, CAB etc could do the work for free if they wish and are capable) merely that someone during the process ensures an express contract is formed with a supplier of choice by the consumer not a loose "deemed contract" with unidentified parties and terms