Mandatory back-bill deadline important to protect customers from shock bills, says Citizens Advice
New rules, proposed by Ofgem today, to put a 12 month time limit on energy back bills will help protect consumers, says Citizens Advice.
The national charity has been calling on Ofgem to make this a mandatory requirement in suppliers’ licences after the evidence showed suppliers weren’t always acting under the voluntary guidelines.
Citizens Advice provided evidence from the Extra Help Unit and the Citizens Advice Consumer Service of suppliers refusing to help customers with large back bills. Back bills are revised bills that energy suppliers send after undercharging customers.
Citizens Advice Chief Executive, Gillian Guy, said:
“Shock gas and electricity bills can throw people’s finances into disarray.
“Often through no fault of their own, people are being hit with large back bills costing hundreds or even thousands of pounds. We helped one person who received a bill for over £3,000 after their energy company stopped taking their direct debit payment but didn’t tell the customer. The firm refused to apply the 12 month back bill limit, leaving the customer to pay the full bill. We are helping the customer challenge these costs but Ofgem’s plans today should protect people in similar situations in the future.
“We’ve long been calling on the regulator to introduce a mandatory time limit for back bills instead of relying on voluntary action – which suppliers have refused to apply in some cases – so we’re really pleased to see Ofgem take this action today.
“The regulator is also right to look at a shorter time limit of 6 months for smart meter back bills. Given that smart meters are supposed to provide an accurate bill first time, we’d like to see this back bill limit eventually reduced to 3 months.”
Examples of where companies did not apply the voluntary 12 month back bill limit to help consumers:
One woman was told last December that she had an outstanding debt of £1,300, because the company had been billing on the wrong tariff since 2011. The company told her that the back billing code only applies to new bills, and it didn’t apply to her, so she was liable for the whole debt.
One person was chased for a debt of £514 in january of this year, because the company changed its billing system in 2015, and has only recently begun to collect debt owed.
Having changed supplier in 2013, one customer received a letter from a debt collection agency for £652, last November. The company has admitted they did not send any bills because they had the wrong address on their system, but said that the back billing code doesn’t apply because this was a data entry issue.
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