Ofgem is calling on large suppliers to make sure money is returned to their former customers after its analysis revealed that the companies hold more than £400m in credit from closed accounts.

This builds on recent commitments by most major suppliers to automatically refund surpluses to current direct debit customers.

Ofgem has been enquiring into the balances held by energy suppliers in relation to accounts that are now closed, and into the companies’ policies and practices that apply. This concerns customers who have closed accounts, for example because they have changed supplier or moved house. Ofgem's analysis shows an unacceptably large amount of money being retained rather than returned to consumers and a wide variation in company practices.

-- Advertisement --

With the recent rise in the number of consumers switching supplier, people need to be confident that they won't lose out if they close an account with their present supplier. Ofgem expects suppliers to do all they can to return money to individual consumers, and to tell consumers clearly what to do when closing an account. Where it isn't possible to repay a balance, suppliers should find ways to use this money to benefit consumers more widely, and make clear to customers how much is held and why.

Andrew Wright, Interim Chief Executive of Ofgem, commented: "When many people are struggling to make ends meet, it is vital that energy companies do the right thing and do all they can to return this money and restore consumer trust.

"We want to see decisive action by suppliers, individually and collectively, to address this issue and, wherever possible, to ensure that the balances they currently hold are returned to consumers. Where this can’t be done any remaining sums should be used to benefit consumers more generally, and suppliers need to be very clear with consumers about what they will be doing with this money."

(CD)