Direct Debits, Fixed vs Variable

EssexHebridean

VDD can indeed be excellent for many people, but there are also some people who absolutely shouldn't go down that route.

• Anyone who struggles with budgeting for whatever reason - as failure to set aside that money for the higher winter bills can leave them in significant financial difficulty when those bills arrive and the DD is taken.
• Anyone who doesn't regularly check their bills are bank account - make sure you are being charged correctly AND that the correct amount is being taken.
• Anyone suffering any degree of coercive control - whether that directly relates to finances currently or not.

We need to be incredibly careful not to dress this up as something which everyone "should" be looking to do.

For those on the standard monthly DD, remember that the supplier has an obligation to ensure that the DD is fair and proportionate in relation to your actual expected use - if you feel a suggested increase is too high, do the sums, check the figures and then politely challenge. If you go armed with the relevant (correct!) information and are clear on your facts and your position, and ensure that you are polite and civil throughout, this is frequently very straightforward. Many suppliers even let you adjust your DD in your online account too - for this to work it's key to ensure that you don't under estimate, though.

[Deleted User]

https://forums.moneysavingexpert.com/discussion/comment/81900459#Comment_81900459

What are the "hurdles" you refer to?

I currently pay my energy via variable direct because that is all my elected supplier currently offers (but they are hoping to introduce a fixed monthly DD option shortly, to satisfy customer demand)

But I was on fixed monthly direct debit with my previous 3 suppliers. 2 out of 3 of those suppliers were major suppliers and I could usually change my monthly payment by amending it online. Otherwise, a quick email would see them adjust the monthly payment as requested. The third supplier was small, and had a limited online portal, but again a quick email saw the monthly payment adjusted as requested.

(There may be more hurdles put in place if your request is considered unreasonable. e.g. If you agree to pay your account by monthly direct debit, they don't expect you to be paying some/all of the monthly amount by another method on a regular basis)

pseudodox

@EssexHebridean is perfectly correct. One size does not fit all. Unfortunately there is little advice given out by the energy providers to customers as to the pros and cons of any payment method. Considering how many people we see on here (a very small proportion of domestic energy consumers) who have problems with their FDD I wonder how many more out there are in difficulties no matter how they pay their bills. Even pre-payment seems to have issues for some. For the few who do appear on this site they are over and over given good advice by site regulars. It is their responsibility to weight up the alternatives, think about their own circumstances and take heed. You can lead a horse to water . . . . . .

As said by @Flintman the work required by the likes of them and myself to manage accounts/payments is minimal which of course must mean in return a minimal admin cost to the supplier, despite our having the benefit of a monthly credit system that does not give them our money upfront. How much more does it cost a supplier to administer forever changing FDDs, issuing refunds, negotiating with unhappy customers, managing switches from tariff to tariff either within their own business or seeing customes moving to/from "rivals".

A lot of admin is processed by AI - I don't expect when I submitted my readings at 7am on New Year's Day and found my bill online in my account by 3pm that some CS person was actually at a desk dedicated to processing my information. Nor does a human reach out to take the DD on the appointed day. An accounts double entry system will match bills and payments. Job done. But AI is not free to the business using it. It has to be managed just as human staff are. Which all means ongoing costs (although no canteen or toilet facilities required, no payroll admin etc).

At least when EDF take my DD it is theirs to keep, every single penny, and I have never yet (touch wood) had to dispute a monthly bill based on my own readings. They take the DD 10 working days after invoice date, although usually apply to my bank after 7 days and it then shows as a pending payment on my bank account. Am I any more likely to default on or challenge the payment than if it was a FDD if I have already shown I am in control of my outgoings? Of course not.

[Deleted User]

https://forums.moneysavingexpert.com/discussion/comment/81900598#Comment_81900598

"At least when EDF take my DD it is theirs to keep, every single penny, and I have never yet (touch wood) had to dispute a monthly bill based on my own readings. They take the DD 10 working days after invoice date, although usually apply to my bank after 7 days and it then shows as a pending payment on my bank account. Am I any more likely to default on or challenge the payment than if it was a FDD if I have already shown I am in control of my outgoings? Of course not."

One problem I have found with paying by variable DD is that if there is an error in the bill itself that you dispute, unfortunately the collection file has already been compiled and is on it's way to the banking system (BACS?) for processing.

The advance notice period was introduced to allow a bill to be challenged and allow the supplier to correct it before collecting the money on the incorrect bill, but in reality it does not usually work that way. So all the supplier can recommend is you get a full & immediate refund via your bank via the DD guarantee after they take it,

That can lead to more issues with some suppliers who think (or sometimes invoke) a failed or returned collection is the result of you cancelling the mandate. So the supplier (and EDF is an example I have experienced when I incorrectly cancelled my DD mandate after they ceased supplying me - they are one supplier who insists the DD mandate remains live until they close it with a final collection/refund transaction) then takes you off your tariff and rebills according to their expensive default tariff for payment other than by DD.

In contrast, the last fixed monthly payment change notice I received from EDF was provided about 6 weeks before it was due to take place, so plenty of time to challenge it and lower/revert it as applicable.

pseudodox

I received one bill that was based on estimated reading (boring reasons) on 1st of month with VDD payment date of 17th. I immediately challenged it, it was reversed 2 days later & new bill issued on accurate readings & VDD date revised to 20th. Payment went out on 20th. We can each of us only go off our own experience.

I used to work in accounts & collected/reconciled a lot of monthly DD payments covering regular & newly set up accounts. Whenever a bill was queried within a day or three the DD was put on hold until agreement was reached. The BACS file did not go out for several more days, leaving time to resolve the problem or suspend it pending further enquiry, so there was only an issue if the payer waited until they saw the DD leave their bank and THEN contested the amount.

[Deleted User]

https://forums.moneysavingexpert.com/discussion/comment/81900735#Comment_81900735

That's good to hear. It sounds like the business you were working for was operating the DD system exactly as originally envisaged.

The could be a many reasons why it so often no longer works that way in practice.

e.g. the reduction in the standard 10 working days advance notice (subject to the sponsor's approval)

More and more businesses seem to be using third party collection bureaus to collect DD's on their behalf. Originally set up for use by smaller businesses who would not receive authorisation to operate the DD scheme themselves, they are increasingly now being used by larger businesses too. e.g. I know Octopus Energy use one to collect DD's on their behalf.

bob2302

https://forums.moneysavingexpert.com/discussion/comment/81900459#Comment_81900459

I can set my DD or refund credit in a few taps on my phone - this is being in control. To be in control with VDD, you have to be a weather god. The interest argument makes sense for some people, but not this.

pseudodox

To be in control with VDD you just have to be in control of your own life. Don't need to make ANY taps on my phone beyond entering meter readings once a month - have got far more interesting stuff going on in my life than searching the house for where I last left it, waking it up, tapping it for anything else to do with my energy consumption. I am using a procedure that perfectly suits me and I am very happy for everyone else to manage their life exactly how they please.

EssexHebridean

To be able to use VDD you have to have the ABILITY to be in control of your own life, and for that life to suit VDD. Neither is per se "better" or "worse" than the other across the board - monthly DD suits me perfectly, as with the variable option I'd have to have far more input into things than I choose to have, whereas VDD will suit someone else better for their own reasons. I don't have less control over my money with my standard monthly DD - I just choose to manage it differently. The key thing is that it should be a more informed choice than it currently is - with so many suppliers opting to keep the option of variable a well-kept secret!