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Not paying for energy by direct debit? That’ll cost you £114

Figures from DECC reveal that gas and electricity customers who don’t pay by direct debit are typically charged far more than those who do

Those who don't pay by direct debit are charged an average of £114 per year

Those who don’t pay by direct debit are charged an average of £114 more per year

MP for Harlow Robert Halfron has spoken out against the level of savings granted to customers who pay via direct debit.

He argues that those who do not pay by direct debit are often those most in need of the savings and the current system does not work in their favour.

The reason many choose not to pay by direct debit is linked to a lack of trust for energy companies and a fear of losing control of finances.

Disproportionate savings

In a blog post entitled “The scandal of hidden utility bill charges”, Halfron states that 45% of households do not pay by direct debit and are therefore charged an average of £114 per year more than those who do.

“Whilst it may be understandable for there to be a modest discount, many would question whether companies like Spark Energy truly save £390 on an average bill if their customers pay by direct debit,” he said.

“People should not be penalised for how they pay their energy bills. After all, it would be unacceptable for Tesco to charge you an extra 10 per cent on your weekly shop because you didn’t pay in cash.

“It is reasonable to expect customers to pay a moderate administration fee,” he added.

Halfron’s recommendations

Halfon makes a number of suggestions for limiting these charges. Firstly, he suggests imposing a limit on the extra fees companies can charge those not paying by direct debit. He also suggests forcing energy companies to be more open with regards to “hidden costs”.

Finally, Halfon calls for a government-led review to determine why some companies charge extra, or different amounts, for not paying by direct debit.

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