HomeIndustry SectorsFinance and PolicyBorrowing money to pay utility bills

Borrowing money to pay utility bills

According to a recent report in the Daily Mail, almost a fifth of UK adults have had to resort to relying on a credit card or loan to pay their utility bills, as costs continue to soar.  Quoting a recent survey, the report went on to say that up to 18.9 per cent have paid for gas, electricity or water with credit – an increase of more than 300 per cent on 2013.

The number rises to more than a quarter for those aged 25 to 34, as the younger generation struggle with juggling bills, getting on the property ladder and starting a family.

More than a third of Londoners admitted to settling their energy bills on credit – compared to just one in ten in the South West, the Debt Advisory Centre poll found.  Meanwhile a second set of damning figures reveal energy complaints trebled between January and March this year compared to last.

Despite months in the spotlight, with scrutiny from the watchdog Ofgem, battles between politicians and pledges from energy companies to clean up their act, energy companies continued to “fail” thousands of customers, the figures suggest.

The Ombudsman for the energy sector received 10,638 complaints relating to the energy sector in the first three months of 2014, trebling the 3,277 complaints received over the same period last year.

Billing remained the top complaint: 2,062 consumers complained about not receiving bills and another 1,474 made complaints relating to billing charges.

The latest figures from Ombudsman Services show increases of record levels, and come soon after regulator Ofgem said that it was referring the sector to the Competition and Markets Authority for a full-scale competition inquiry.

Chief Energy Ombudsman Lewis Shand Smith called for increased transparency in the wake of the figures.

Mr Smith said: ‘Consumer frustration and dissatisfaction is something that we hear about every day, and we welcome any attempts by Ofgem to make the energy market fairer.

‘With energy complaints trebling in the first quarter of this year and problems relating to billing the greatest concern, increased transparency is something that should be addressed.’

A spokeswoman for Energy UK, the trade body that represents the industry, said most customers had no problems with their energy company, but accepted that sometimes things go wrong.

She added: ‘If a customer has any concerns relating to their bills, they should contact their provider as soon as they can, and if possible have an up-to-date meter reading to hand which will ensure their bill is as accurate as possible.

‘Energy companies work very hard to resolve problems and most complaints are fixed within a few working days with no more than a phone call.’

The spokeswoman said there were new rules in force which made matters ‘more open and clear for customers including: explaining bills so people understand what they are paying; making it easy to switch; ensuring customers are on the right deals; and simplifying tariffs’.

But Richard Lloyd, executive director of Which? was less optimistic.

‘The fact that consumer complaints continue to rise is further proof that the energy market is broken and it is right that it has been referred for a full-scale investigation,’ he said.  ‘Which? will continue to argue for radical reforms that ensure the outcome is a market that works competitively for everyone and especially for the millions struggling with spiralling bills.’

SSE, one of the Big Six companies, said it was listening to customers’ concerns and was committed to freezing prices until at least 2016.  A spokesman for SSE added: ‘We have also made improvements towards our customer service, including: the introduction of a customer service guarantee that gives money back to customers if SSE fails to meet a set of promises; an end to cold calling; a sales guarantee which gives customers peace of mind when they buy from SSE; simplified tariffs and bills; and the introduction of an online SSE energy price checker – making it even easier for customers to get a quick energy price and compare the tariffs on offer.’

Top Stories:
Borrowing money to pay utility bills
We will play in the energy space says PIC
Electricity: Africa’s secret weapon for economic unity
West Africa’s power sector must be reformed