Outfox the Market changing my FIXED direct debits!

MattMattMattUK

bagand96 said:

Doesn't Ofgem require suppliers to now keep on top of accounts and not let them get into debt to avoid bill shock etc? 

Ofgem require that suppliers make sure customers neither build up too much debt or credit. That includes guidance that those on fixed Direct Debits should at no point go more than one month's payment into debt or two months payment as credit, although there is some flexibility on the credit. That is fine when they can manage it over a full year starting pre-winter, but it gets more complicated for those joining in winter when they will need higher initial payments to cover that higher usage, or lower then higher payments for those joining in sprint when usage drops, before it increases again the following winter. Bill shock is related to back billing and is why suppliers cannot charge for energy that has not been billed after a year (though more complicated than that). 

JohnSwift10

Does OFTM not have variable direct debits?

I am with Eon and pay using variable direct debit and put one twelfth my estimated bill (what would have been my direct debit) in a savings account every month and use that to pay my bill every month.

That way I pay for my gas and electricity in arears and make a few pence interest.

MattMattMattUK

JohnSwift10 said:

Does OFTM not have variable direct debits?

No, they do not. The only three I am sure of at the moment are Octopus and EDF and Eon Next.

JohnSwift10 said:

I am with Eon and pay using variable direct debit and put one twelfth my estimated bill (what would have been my direct debit) in a savings account every month and use that to pay my bill every month.

That way I pay for my gas and electricity in arears and make a few pence interest.

I any many others on here use variable Direct Debit, but many consumers do not like the seasonal variations in cost and prefer a flat(ish) figure over the year. For anyone who is competent budgeting then I think variable is the way to go, but it can present issues for some.

FreeBear

MattMattMattUK said:

kindregards said:

Thanks for your replies. I've been with all the energy companies over the years (thanks to Martin lol), and this is the first time a DD has ever been changed like this (and twice) during a fixed contract. In the past, usually if there is a debit at the end you just settle up with them and vice versa.

Maybe the moral of the story is not to change your supplier at the end of August, especially with OTM?

I'll be changing anyway, don't like their ways.

The moral of the story is probably to not go on a rant before attempting to understand what is actually happening. Nearly every supplier now adjusts Direct Debits throughout the year because they get in trouble when customers get either too much into credit or into debt at any point in the year. 

Been with OFTM, Eon.Next, and most recently, Octopus - They would "review" the account on an annual basis and adjust the monthly DD based on a simple (estimated annual cost)/(12 months). If I were on a SVT, a review every 3 months would not be that unreasonable.

Octopus did recommend increasing my DD by 10% when I switched from Tracker to a 12m fixed. But I'd built up a healthy balance equal to about two months of average usage as we entered the winter period. On that basis, I've reduced the DD by a few pennies.

WiserMiser

Fixed DD was always a misleading term, and with the price cap changing every three months it's now almost meaningless.  Variable DD should be the default for all suppliers, with an opt-out for those unable or unwilling to budget for themselves.

QrizB

Whooooooosh said:

I'm on Outfox The Market (OTM) and they keep reducing my DD.  I want to pay £200 a month to build up a buffer in case of a harsh winter.

You might be bettoff sticking the money in a cash ISA and earning 4% on it, rather than keeping it on account with OTM.
(I appreciate there are a few situations where lending it to your supplier might be a better idea.)

Scot_39

At least some suppliers are moving explicitly to a zero minimum balance on annualised DDs.

I know in past MSE have carried charts suggesting you should expect to be in debit part of the year and credit the other - and guess that fits in with your clear expectation of zero balance in August.

But those days are disappearing in face of Ofgem anti debt guidance and the supplier debt crisis / or just simply higher rates and the impact that then has on operating costs to finance negative cashflow.

Many have complained about these shifts - and so jumped to other payment methods - like MVDD or even prepay (that for at least a while actually was even nearly £50 cheaper at cap levels than DD)

Ovo for one iirc past posts - gave at least some of thier existing customers over a year to make corrections to their account balance to fit in.  So targetted Mar 2026 zero balance to achieve that position.  But anyone having that review now would in theory only get 10m

And in theory anyone unless the date is moved on later in the year - say getting a review in Aug like you expected - would only get c7 months - and it would be based on your predicted debit in Mar 26 - not your predicted 0 balance in Aug - when they would expect you to be well on the way to maximum - having built credit over summer for the coming winter. Which for many sat least in North - starts in Aug / Sep.

So if you were say £100 in debit in Apr - so maybe even more in Mar - you might well expect - all other things being constant - that you would maybe see a £15-20 correction for rest of the year.  Before returning to actual cost / 12 after that date.

I though I read Octopus did something similar - and I know their customers here say all accounts should now be maintained in credit these days - but their method of getting their is different - and potentially their target - at least according to this blog link - is in fact potentially higher

https://octopus.energy/blog/direct-debit-payments/

Who state they regard a healthy cycle as actually 5 weeks credit balance at start of Apr - not zero balance - at the end of winter.  

AS I say - far from your expectation of zero balance in August.

And they also state make the correction over 12 months - to shift the whole curve up - based on current prediction for the following April - regardless of review date. ( A shorter period than iirc Ovo allowed many existing customers)

So  in short - 2 major changes are going on here - based on perhaps your more traditional expectation

1) their is clearly no intention at some suppliers to allow debit balance going forward long term - you will ideally be in credit throughout the year on annualised plans.

2) the curves now being caculated targetting end of winter determining credit cycle minimum.

Not as often in past the simple 0 balance at personal account review dates (mine was July for years at EOn - even after shifts to and then from 3m / 6m bill cycles - but that pre cap pre EOn Next move etc etc).

Many as above do object to this change - but it should be remembered of course that part of the reason Ofgem set DD levels singnificantly lower in the cap (was £120 this quarter iirc - so over 5%) than standard credit - was the data showing annual plans were at least on average notably in credit for at least part of the year.

And standard credit - like MVDD at some suppliers - is always paid after consumption - so always negative on cashflow - never normally in credit.  So impacts cashflow costs and credit default risks. But with some like EDF now moving standard credit to monthly cycle - its far more difficult to argue the two should be treated as differently.

Fried_Eggs

There is some confusion between, say a "fixed rate mortgage" where you pay the same cost every month and a "fixed rate energy contract" where you pay for what you use at a fixed rate. The latter doesn't guarantee a fixed payment. If you use more than they estimate you end up paying more and if you use less, you pay less. Ideally you should stay in credit for half the year, but many companies seem to like you to stay in credit most of the year so you don't get a shock if you change suppliers or leave a cheap contract.

MWT

Fried_Eggs said:

There is some confusion between, say a "fixed rate mortgage" where you pay the same cost every month and a "fixed rate energy contract" where you pay for what you use at a fixed rate. The latter doesn't guarantee a fixed payment. If you use more than they estimate you end up paying more and if you use less, you pay less. Ideally you should stay in credit for half the year, but many companies seem to like you to stay in credit most of the year so you don't get a shock if you change suppliers or leave a cheap contract.

Even a fixed rate mortgage will have small differences in the monthly payments with most lenders due to weekends, number of days in the month etc.

hareng

kindregards said:

Sorry I'm new here on the MSE forum, but I want to make anybody reading this and Martin Lewis (who is now championing them again on here, and probably on his programme last night) aware of Outfox the Market changing your Direct Debits while you are on a FIXED rate! You can't trust them to keep their word basically!
   
This has happened twice to me this year, which makes me think they review your account every quarter! First time round they tried to put my DD up £10 a month in Feb (BTW they change the DD AND THEN email you the panic email). I questioned this and they quickly changed it back, must have got the nice female agent in the office.

But this second time they really went for the biggie, nearly a 70% increase to £219 a month (my DD is £130), so I was on the phone straight away, and they did bring it down, but it is still a £31 rise a month to £161.

I tried to explain that by the end of August contract (the next four months being the lowest usage a given right?), my account would be back to zero or very close to it. Unfortunately I did not get the intelligent agent this time but some robot who just wouldn't give in, even though he knew what I meant!

The cynic in me is saying that OTM has set the algorithm to go after pensioners to get some quick money in, pensioners less likely to complain or not understanding etc right? Then OTM can bank the extras and stick your money in a high savings account and make lots of money! The other thing I thought was that they may just in financial trouble.

So has anybody else had this done to them. Would be handy to hear from yous. Hope I haven't broken any rules being new, bit am pretty livid at the moment. It's not so much the money but the principal in all this, and I feel like I'm being ripped!

Thank in advance,
David

Obviously how much are you in debt?
Its not the direct debit amount thats based on what you initially told them, not what you are Actually using, big difference.
For the record a simple message and they refunded 4 months+ credit as was over paying within 9 days and dropped DD to a satisfactory level, since i submit both meter readings every month without fail.