The collapse of 11 energy suppliers since the beginning of 2018 has left a £172 million bill behind which, according to Citizens Advice, nearly 30 million households in the UK will need to cover by paying higher bills.
Of these 30 million, around 32,000 households could also be facing visits from debt collectors as part of the administration’s efforts to bail out the suppliers. The Citizens Advice charity says it has been supporting over 1,000 ‘distressed and anxious’ consumers following the collapse of their energy supplier. While typical debt collection agencies have to abide by consumer protection laws, administrators are not held to the same standards.
The chief executive of Citizens Advice, Gillian Guy, said: “Consumers shouldn’t have to foot the multi-million-pound bill left behind when companies collapse – and they certainly shouldn’t lose their usual protections in the process.”
Citizens Advice has called for government action to bridge the gap between the protections offered to energy suppliers which are operating and those who have gone under and for Ofgem to limit the cost of any future supplier failures. Currently, Ofgem has a ‘safety net’ process when an energy supplier goes bust whereby the consumers are passed to another supplier and the unpaid costs are reclaimed through energy bills across the energy market.
According to Energy UK, Ofgem has been forced to use this process ‘more than ever expected’ as they lowered the minimum standards to enable smaller suppliers to compete with the big six. Earlier this year Ofgem announced that it plans to introduce stricter financial testing on new energy supplier to ensure they are fit to provide a service for consumers.
Energy UK commented: “The increase in competition and the number of suppliers in recent years have been great for customers in providing choice and driving down prices,”
“But we welcome Ofgem bringing in tougher checks for suppliers entering and operating in the market to ensure they have sustainable business models and are adequately financed to serve their customers.”
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