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Direct Debit - What to be Aware Of
Consumer groups are urging people who pay their fuel bills by direct debit to watch out, because it is claimed that millions of pounds are being exploited to earn the energy companies a fortune in interest.
It’s time to fight back, say the action groups, and not allow over-estimations to make the energy suppliers a very tidy sum.
They point out that the suppliers are all too quick to combine actual energy costs with provisions and service costs, calculate a yearly usage, then base your direct debit on the total divided by 12 months. Inevitably, during the warmer summer months, you are paying too much for your energy, which creates a surplus which the suppliers exploit.
And what’s worse, they claim, is that a lot of suppliers are setting their rates at some arbitrary figure, which bears little relation to the actual cost of energy, in order to create overestimated amounts that can be gathered via direct debits.
In other words, they are being accused of creating this situation to improve their cashflow.
Whether this is a fair accusation, or not, depends on if the suppliers are deliberately setting out to create an overpay situation, or if this is just a natural consequence of the direct debit payment method.
And although this might be an innocent consequence, what is not helping the situation is the suppliers reluctance to lower the direct debit when being asked, during the year, and even after the year has finished, still not lowering the monthly payments.
Of course, the flipside of this problem, too low payments, means that consumers are being hit again, as when the year ends, the suppliers can legally enforce payment in one lump sum.
Whatever your situation, the consumer groups are asking consumers to complain when it comes to direct debits. They do not dispute that it is an efficient way to pay a bill and that it can work out to be some 10% cheaper than other payments, but do contend that it can easily be abused, whether intentionally, or not.
It recommends that people look out for letters from suppliers, or take a closer look at their existing direct debits.
If you get a letter advising a new level of charges, which will taken via direct debit, make sure that the new charges are appropriate. Check out your new rates whith others suppliers. Also don’t forget that a supplier should give you a clear ten days notice – on your bill, or in a letter – that they intend to change your direct debit.
Another complaint is from people that switch to a new supplier for cheaper rates, then find that there direct debit is more expensive than before and faced with the reasoning that as a new customer, they have no choice but to guess future usage. This requires a well thought-out complaint, whether verbally, or in writing.
And for those that just think their direct debit is just too high, then it’s wise to contact your energy supplier first, make your case, and if they are not sympathetic, carry on complaining.
Your complaint can be supported by proper meter readings (not just their estimates); always make a sound case for asking for your money back earlier than the year-end (especially if it is a substantial credit situation); ask for a lower direct debit to be considered (if you’ve continually highlighted overpayment to your supplier, then they will have to come up with a pretty good argument not to lower your direct debit); and, if being nice and persuasive doesn’t work, complain to the Energy Ombudsman.
There’s nothing worse than paying over the odds for something, so if you feel that you are being in effect cheated out of your hard earned money by some unfair direct debit practices, complain straightaway, and complain loudly.
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