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Ofgem launches investigation into energy companies’ debt chasing tactics

The energy regulator is reviewing the practice employed by certain energy companies, of using fake debt collection agencies to ‘scare’ indebted customers

Energy suppliers are using fake debt collection agencies to chase hard up customers

Energy suppliers are using fake debt collection agencies to chase hard up customers

Each of the big six energy companies has been found to mislead indebted customers by sending letters claiming to be from a debt collection agency.

The letters are in fact sent from the energy suppliers themselves, but using an alias. npower, for example, send customers letters alleging to be from “Collections Direct”, whereas Utility Warehouse use the name “Utility Debt Collectors Ltd”.

E.ON and ScottishPower, operated under the names “Utility Debt Collectors Ltd” and “Sterling Collections”, although both have since put an end to the practice.

Letters used as ‘last resort’

According to the Ofgem, energy suppliers use these tactics as a last resort, before an external debt collection agency is actually brought in.

The energy regulator has been critical of the fact that these letters do not tell customers that they can work out a repayment plan with the energy company, but simply demand full payment upfront.

A spokesperson for Ofgem said: “Customers must not be misled, pressurised or scared into making payments they cannot afford.

“The aim of this work is to ensure that consumers who are struggling to pay are made aware of repayment options available.”

‘Hard-pressed customers need help not intimidation’

Speaking on the issue, Ann Robinson, Director of Consumer Policy at uSwitch, said: “We support fully the strengthening of rules in this area by Ofgem. It’s unacceptable that energy companies would ever be allowed to mislead consumers by sending letters which appear to be from debt collectors. Hard-pressed customers in debt need help to manage their finances, not intimidation.

“Sky-high energy prices have understandably left many consumers struggling to afford bills –  our research shows that, worryingly, more than 1 in 10 homes are currently in debt to their energy supplier and a third of these owe more now than they did a year ago.”

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