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Energy firms threatened with legal action over forced prepayment meter switches

Paloma Kubiak
Written By:
Paloma Kubiak

Ofgem has opened a review looking at energy firms’ “checks and balances” when it comes to forced prepayment meter installations, as it threatens to take legal action if they’ve not taken “due care”.

The CEO of Ofgem Jonathan Brearley said its review will focus on self-disconnection, remote switching and forced installations, and the checks and balances companies have around any decision to put a customer on prepayment meter.

“If we find that they have not taken due care in this process, we will take further legal action,” Brearley threatened in a blog post published today.

He said suppliers are expected to have a “minimum standard”, adding it will continue to look at the rules around mandatory moves to prepayment meters, when a court warrant can be applied for, and the steps that need to be taken first.

Further, Ofgem is also calling for a “serious assessment of a social tariff”. Brearley explained: “This is a tariff that is set at a different rate for vulnerable customers and protects against the impact of extremely high prices.

“If it can be made to work, this could tackle the root cause of this issue and the distress that many customers are in this winter.”

Brearley said that these steps taken together will put a “more balanced prepayment meter regime in place”, adding that when used responsibly they help protect customers from being cut off from supply while enabling firms to recoup debt.

Government crack down on ‘rogue’ energy firms

The Ofgem review comes after the Government told energy suppliers over the weekend to stop forced prepayment meter switches before having explored every other alternative “to end the mistreatment of customers”.

These alternative routes include offering additional credit, debt forgiveness or tools such as debt advice before going to court to obtain a warrant for the meter switch.

Business and energy secretary Grant Shapps also demanded firms share the number of warrants they’ve applied for in recent months so the Government can name and shame the worst “trigger happy” offenders.

It follows recent reports suggesting the number of people switched to prepayment meter has soared in the last few months, with some left without gas and electricity with little or no notice.

Indeed, Brearley noted in his blog post about one customer he spoke to in Glasgow, went on holiday and  returned to find that he had been switched to prepay without his knowledge, with no way to top-up.

The Government added “courts are being overwhelmed” with applications for warrants, with reports over “huge batches approved in a matter of minutes”.

‘Suppliers jumping the gun’

Shapps said: “Suppliers are clearly jumping the gun and moving at-risk customers onto prepayment meters before offering them the support they are entitled to – I simply cannot believe that every possible alternative has been exhausted in all these cases.

“I am deeply concerned to see reports of customers being switched to prepayment meters against their will, with some disconnected from supply – and quite literally left in the dark.

“Rather than immediately reaching for a new way to extract money out of customers, I want suppliers to stop this practice and lend a more sympathetic ear, offering the kind of forbearance and support that a vulnerable customer struggling to pay should be able to expect.”

The call to stop the practice is voluntary as the Government said a moratorium on forced prepayment switching could lead to an increase in bailiff action – a move it wishes to avoid.

Related: See YourMoney.com’s Moving to an energy prepayment meter: Everything you need to know for more information.